Document ID: FERC-2018-0510-0001
Agency: ferc
Document Type: Notice
Title: Certification of New Interstate Natural Gas Facilities
Posted Date: 2018-04-25T04:00Z

[Federal Register Volume 83, Number 80 (Wednesday, April 25, 2018)]
[Notices]
[Pages 18020-18032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08658]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. PL18-1-000]

Certification of New Interstate Natural Gas Facilities

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of Inquiry.

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SUMMARY: In this Notice of Inquiry, the Federal Energy Regulatory 
Commission (Commission) seeks information and stakeholder perspectives 
to help the

[[Page 18021]]

Commission explore whether, and if so how, it should revise its 
approach under its currently effective policy statement on the 
certification of new natural gas transportation facilities to determine 
whether a proposed natural gas project is or will be required by the 
present or future public convenience and necessity, as that standard is 
established in section 7 of the Natural Gas Act.

DATES: Comments are due June 25, 2018.

ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways:
     Electronic Filing through http://www.ferc.gov. Documents 
created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format.
     Mail/Hand Delivery: Those unable to file electronically 
may mail or hand-deliver comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE, 
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Comment 
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT: 
Thomas Chandler (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street NE, Washington, 
DC 20426, 202-502-6699.
Maggie Suter (Technical Information), Office of Energy Projects, 
Federal Energy Regulatory Commission, 888 First Street NE, Washington, 
DC 20426, 202-502-6463.
Caroline Wozniak (Technical Information), Office of Energy Market 
Regulation, Federal Energy Regulatory Commission, 888 First Street NE, 
Washington, DC 20426, 202-502-8931.
Brian White (Technical Information), Office of Energy Market 
Regulation, Federal Energy Regulatory Commission, 888 First Street NE, 
Washington, DC 20426, 202-502-8332.

SUPPLEMENTARY INFORMATION: 
    1. In this Notice of Inquiry, the Commission seeks information and 
stakeholder perspectives to help the Commission explore whether, and if 
so how, it should revise its approach under its currently effective 
policy statement on the certification of new natural gas transportation 
facilities (Policy Statement) \1\ to determine whether a proposed 
natural gas project is or will be required by the present or future 
public convenience and necessity, as that standard is established in 
section 7 of the Natural Gas Act (NGA).\2\ Specifically, the Commission 
seeks input on whether, and if so how, the Commission should adjust: 
(1) Its methodology for determining whether there is a need for a 
proposed project, including the Commission's consideration of precedent 
agreements and contracts for service as evidence of such need; (2) its 
consideration of the potential exercise of eminent domain and of 
landowner interests related to a proposed project; and (3) its 
evaluation of the environmental impact of a proposed project. Finally, 
the Commission seeks input on whether there are specific changes the 
Commission could consider implementing to improve the efficiency and 
effectiveness of its certificate processes including pre-filing, post-
filing, and post-order issuance.
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    \1\ Certification of New Interstate Natural Gas Pipeline 
Facilities, 88 FERC ] 61,227 (1999), clarified, 90 FERC ] 61,128, 
further clarified, 92 FERC ] 61,094 (2000) (Policy Statement).
    \2\ 15 U.S.C. 717f.
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    2. Nineteen years have passed since the Commission issued the 
Policy Statement to describe the criteria and analytical steps that the 
Commission uses to balance a proposed natural gas pipeline project's 
public benefits against its potential adverse consequences. That period 
has seen significant changes, such as: (1) A revolution in natural gas 
production technology leading to dramatic increases in production; (2) 
new areas of major natural gas production; (3) flows on pipeline 
systems becoming bidirectional or reversing; (4) customers routinely 
entering into long-term precedent agreements for firm service during 
the formative stage of potential projects and the use of those 
precedent agreements as applicants' principal evidence of the need for 
their projects; (5) the increased use of natural gas as a fuel source 
for electric generation, resulting in a closer relationship between 
natural gas transportation and natural gas-fired electric generation; 
(6) increased concerns expressed by landowners and communities 
potentially affected \3\ by proposed projects; (7) an increased 
interest regarding the Commission's evaluation of the impact that 
greenhouse gas (GHG) emissions associated with a proposed project have 
on global climate change; (8) an increased focus on environmental 
concerns within the NGA public interest determination; and (9) a desire 
to generally expand or limit the Commission's evaluation under the 
National Environmental Policy Act of 1969 (NEPA).\4\
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    \3\ The total miles of interstate natural gas pipeline 
authorized by the Commission on an annual basis has fluctuated over 
time, but in recent years reached a high of 2,739 miles in 2017. See 
generally Federal Energy Regulatory Commission, 2017 State of the 
Markets Report, at 4 (Apr. 2018), www.ferc.gov/market-oversight/market-oversight.asp (providing the number of approved pipelines 
projects and miles for 2017).
    \4\ 42 U.S.C. 4332-4370f.
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    3. The Commission's aim in this proceeding is the same as in the 
Policy Statement: ``to appropriately consider the enhancement of 
competitive transportation alternatives, the possibility of over 
building, the avoidance of unnecessary disruption of the environment, 
and the unneeded exercise of eminent domain.'' \5\ In issuing this 
Notice of Inquiry, the Commission seeks information to examine the 
Policy Statement and its application, as well as the structure and 
scope of the Commission's environmental analysis of proposed natural 
gas projects. Further, it is the Commission's desire to improve the 
transparency, timing, and predictability of the Commission's 
certification process. To these ends, we encourage commenters to 
identify, with specificity, any perceived issues with the Commission's 
current analytical and procedural approaches and to provide detailed 
recommendations to address these issues.
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    \5\ Policy Statement, 88 FERC ] 61,227 at 61,737.
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    4. During the pendency of this proceeding, the Commission intends 
to continue to process natural gas facility matters before it 
consistent with the Policy Statement, and to make determinations on the 
issues raised in those proceedings on a case-by-case basis.\6\ Should 
the Commission decide to generally revise its procedures as a result of 
this proceeding, it will address at that time how and when those 
changes will be implemented. The Commission will decide any next steps 
with regard to this review of the Policy Statement after the Commission 
has reviewed the comments filed in response to this Notice of Inquiry.
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    \6\ The Commission is aware that some of the issues raised in 
this Notice of Inquiry may overlap with issues raised in pending 
matters. In this Notice of Inquiry proceeding, the Commission will 
consider only generic issues, and will not consider any comments 
that refer to open, contested Commission proceedings.
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I. Background

A. The Natural Gas Act of 1938

    5. The NGA declares ``that the business of transporting and selling 
natural gas for ultimate distribution to the public is affected with a 
public interest, and that Federal regulation in matters relating to the 
transportation of

[[Page 18022]]

natural gas and the sale thereof in interstate and foreign commerce is 
necessary in the public interest.'' \7\ NGA section 7(c) requires that 
any person seeking to construct or operate a facility for the 
transportation of natural gas in interstate commerce must obtain a 
certificate of public convenience and necessity from the Commission.\8\ 
Under NGA section 7(e), the Commission shall issue a certificate to any 
qualified applicant upon finding that the construction and operation of 
the proposed project--whether pipeline, storage, or liquefaction 
facilities--``is or will be required by the present or future public 
convenience and necessity.'' \9\ The Commission's regulations provide 
for public notice and the opportunity to intervene in certificate 
proceedings to comment on or protest an application, and to participate 
in the environmental review process.\10\ If an applicant receives a 
certificate from the Commission, NGA section 7(h) authorizes the 
certificate holder to acquire the property rights necessary to 
construct and operate its project by use of eminent domain if it cannot 
reach a voluntary agreement with a landowner.\11\
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    \7\ 15 U.S.C. 717(a).
    \8\ Id. 717f(c)(1)(A).
    \9\ Id. 717f(e).
    \10\ See generally 18 CFR 157.1-157.22 (regulations governing 
applications); id. pt. 380 (implementing NEPA, the Endangered 
Species Act, and the National Historic Preservation Act, and 
prescribing environmental reports for Natural Gas Act applications).
    \11\ 15 U.S.C. 717f(h).
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    6. The public convenience and necessity standard encompasses all 
factors bearing on the public interest.\12\ The words ``public 
interest,'' however, are ``not a broad license to promote the general 
public welfare.'' \13\ The Supreme Court has stated that:
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    \12\ Atl. Refining Co. v. Pub. Serv. Comm'n of N.Y., 360 U.S. 
378, 391 (1959).
    \13\ NAACP v. Fed. Power Comm'n, 425 U.S. 662, 669-70 (1976).

    in order to give content and meaning to the words `public 
interest' as used in the [Federal] Power and [Natural] Gas Acts, it 
is necessary to look to the purposes for which the Acts were 
adopted. In the case of the Power and Gas Acts it is clear that the 
principal purpose of those Acts was to encourage the orderly 
development of plentiful supplies of electricity and natural gas at 
reasonable prices.\14\
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    \14\ Id.

    7. As part of its decision-making process, the Commission, in 
accord with the Policy Statement, determines whether there is a need 
for a proposed project. This analysis is distinct from that required by 
the Council on Environmental Quality (CEQ) regulations, which specify 
that environmental documents contain a ``purpose and need statement'' 
used to determine the objectives of the proposed action and then to 
identify and consider reasonable alternative actions.\15\ Under the 
NGA, the Commission will take into account all information in the 
record from the applicant, parties to the proceeding, commenters, and 
the environmental document to determine whether a proposed project is 
required by the public convenience and necessity.\16\
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    \15\ 40 CFR 1502.13.
    \16\ Fed. Power Comm'n v. Transcontinental Gas Pipe Line Corp., 
365 U.S. 1, 23 (1961).
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    8. The Commission's powers under NGA section 7 are limited. The 
Commission can issue a certificate for a proposed project, subject to 
``such reasonable terms and conditions as the public convenience and 
necessity may require.'' \17\ The Commission can deny an application 
if, and only if, a balancing of all of the factors weighs against 
authorization of the proposed project.\18\ The Policy Statement 
explains that relevant factors reflecting the need for the project 
might include, but would not be limited to, precedent agreements, 
demand projections, potential cost savings to consumers, or a 
comparison of projected demand with the amount of capacity currently 
serving the market while adverse effects include economic, competitive, 
environmental, or other effects on the relevant interests.\19\ We note 
the Commission only has authority over facilities for the 
transportation of natural gas in interstate commerce. The Commission 
has no authority to certificate intrastate facilities or facilities for 
the production, gathering, or local distribution of natural gas.\20\ 
Nor does the Commission have jurisdiction over facilities used for the 
generation of electric energy.\21\
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    \17\ 15 U.S.C. 717f(e).
    \18\ See, e.g., Transcontinental Gas Pipe Line Corp., 365 U.S. 
at 17 (the Commission ``can only exercise a veto power over proposed 
transportation and it can only do this when a balance of all the 
circumstances weighs against certification'').
    \19\ Policy Statement, 88 FERC ] 61,227 at 61,747.
    \20\ NGA section 1(b) states that Commission authority applies 
to interstate transportation of natural gas and sales for resale, 
``but shall not apply to any other transportation or sale of natural 
gas or to the local distribution of natural gas or to the facilities 
used for such distribution or to the production or gathering of 
natural gas.'' 15 U.S.C. 717(b).
    \21\ Section 201 of the Federal Power Act states, the Commission 
``shall not have jurisdiction, except as specifically provided in 
this Part and the Part next following, over facilities used for the 
generation of electric energy.'' 16 U.S.C. 824.
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B. The National Environmental Policy Act of 1969

    9. The Commission's consideration of an application triggers 
environmental review under NEPA.\22\ NEPA and its implementing 
regulations require that before taking a major action, such as action 
on an application for a natural gas project, an agency must take a 
``hard look'' at the environmental consequences of the proposed action 
and at alternatives, and disclose its analysis to the public.\23\ 
Regulations issued by the CEQ to implement NEPA \24\ require agencies, 
including the Commission, to consider the environmental impacts of a 
proposed action, generally by preparing either an Environmental 
Assessment (EA) or an Environmental Impact Statement (EIS).\25\ The 
requirements of NEPA are procedural: They are intended to disclose 
impacts and allow for informed decision-making, but do not mandate a 
particular result or give preeminent weight to environmental 
considerations.\26\
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    \22\ 42 U.S.C. 4332(2)(C).
    \23\ Baltimore Gas & Elec. Co. v. Nat. Res. Defense Council, 
Inc., 462 U.S. 87, 97 (1983) (discussing the twin aims of NEPA).
    \24\ 40 CFR 1500.1-1508.28.
    \25\ Id. 1501.4 (detailing when to prepare an EA versus an EIS).
    \26\ Robertson v. Methow Valley Citizen's Council, 490 U.S. 332, 
350 (1989); see also Baltimore Gas & Elec. Co., 462 U.S. at 97 
(citing Stryckers' Bay Neighborhood Council v. Karlen, 444 U.S. 223, 
227 (1980)).
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    10. An agency's environmental document must include a statement to 
``briefly specify the underlying purpose and need to which the agency 
is responding in proposing the alternatives including the proposed 
action.'' \27\ Agencies use the purpose and need statement to define 
the objectives of a proposed action and then to identify and consider 
reasonable alternatives.\28\ Agencies consider alternatives ``that are 
practical or feasible from the technical and economic standpoint and 
using common sense, rather than simply desirable from the standpoint of 
the applicant.'' \29\ An agency need only evaluate alternatives that 
can satisfy the purpose and need of the proposed project, and the 
evaluation is shaped by the application and the function that the 
agency plays in the decisional process.\30\ Alternatives that are not 
environmentally preferable, not able to

[[Page 18023]]

provide equivalent services, uneconomic, speculative ventures as 
opposed to planned projects, or otherwise inadequate to function as a 
serviceable alternative to the proposed project may be eliminated so 
long as the agency briefly discusses the reasons for the 
elimination.\31\
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    \27\ 40 CFR 1508.9 (describing requirements for an EA).
    \28\ Colo. Envtl. Coal. v. Dombeck, 185 F.3d 1162, 1175 (10th 
Cir. 1999).
    \29\ Forty Most Asked Questions Concerning CEQ's National 
Environmental Policy Act Regulations, 46 FR 18026, 18027 (Mar. 23, 
1981).
    \30\ Citizens Against Burlington, Inc. v. Busey, 938 F.2d 190, 
195, 199 (DC Cir. 1991).
    \31\ 40 CFR 1502.14(a). See, e.g., Bradwood Landing LLC, 126 
FERC ] 61,035, at P 158 (2009); Broadwater Energy LLC, 124 FERC ] 
61,225, at PP 187-189 (2008) (rejecting alternatives that were not 
technically and economically feasible and practical, or did not 
offer significant environmental advantages over the proposed project 
or its components, or were unavailable and/or incapable of being 
implemented, or do not meet the applicants' stated project 
objectives).
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    11. Commission documents under NEPA first address the scope of the 
project (i.e., ``the range of actions, alternatives, and impacts to be 
considered'') \32\, then address the environmental impacts of the 
proposed action, connected actions, and cumulative actions.\33\ 
Commission documents under NEPA may also address similar actions if a 
combined analysis would be the best way to adequately assess combined 
impacts.\34\ These NEPA documents disclose and evaluate the direct, 
indirect, and cumulative impacts of the project on various 
environmental resources in the context of temporary, short-term, long-
term, and permanent impacts, and then consider practical measures to 
avoid, minimize, or mitigate those impacts. Direct impacts are caused 
by the proposed action and occur at the same time and place. Indirect 
impacts are ``caused by the [proposed] action and are later in time or 
farther removed in distance, but are still reasonably foreseeable.'' 
\35\ Cumulative impacts are defined as ``the impact on the environment 
which results from the incremental impact of the [proposed] action when 
added to other past, present, and reasonably foreseeable future 
actions, regardless of what agency (Federal or non-Federal) or person 
undertakes such actions.'' \36\ The impacts of these other actions must 
occur within the same geographic area and same time period in which the 
proposed project's impacts will occur.\37\
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    \32\ 40 CFR 1508.25.
    \33\ Id. 1508.25(a)(1)-(2).
    \34\ Id. 1508.25(a)(3).
    \35\ Id. 1508.8(b).
    \36\ Id. 1508.7.
    \37\ ``[A] consideration of cumulative impacts must also 
consider `[c]losely related and proposed or reasonably foreseeable 
actions that are related by timing or geography.''' O'Reilly v. U.S. 
Army Corps of Engineers, 477 F.3d 225 at 234 (5th Cir. 2007) 
(quoting Vieux Carre Prop. Owners, Residents, & Assocs., Inc. v. 
Pierce, 719 F.2d 1272, 1277 (5th Cir. 1983)); see also CEQ, 
Considering Cumulative Effects Under the National Environmental 
Policy Act, at 12-16 (Jan. 1997), https://www.energy.gov/sites/prod/files/nepapub/nepa_documents/RedDont/G-CEQ-ConsidCumulEffects.pdf.
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C. Conditions and Considerations Leading to the Development of the 
Policy Statement

    12. Historically, the Commission established prices for natural gas 
sales and transportation, and there was little competition for gas 
supply or transportation capacity. Interstate pipelines, operating as 
merchants, produced and/or purchased natural gas at the wellhead, 
transported it to a city gate, and sold it to a local distribution 
company (LDC) at a Commission-regulated price that reflected combined 
(i.e., bundled) commodity and transportation costs. Congress and the 
Commission introduced increasingly competitive elements into this 
merchant model. The Natural Gas Policy Act of 1978 began the process of 
decontrolling wellhead natural gas prices and eased barriers between 
intrastate and interstate markets.\38\ The Commission issued Order No. 
436, which initiated open access transportation to allow downstream gas 
users, such as LDCs and industrial customers, to buy gas directly from 
producers or merchants and transport their gas on interstate 
pipelines.\39\ The Wellhead Decontrol Act of 1989 lifted remaining 
price controls on wellhead sales as of January 1, 1993.\40\ In 1992, 
the Commission issued Order No. 636 to ``reflect and finally complete 
the evolution to competition in the natural gas industry initiated by 
[the above-cited statutory and regulatory revisions] so that all 
natural gas suppliers, including the pipeline as merchant, will compete 
for gas purchasers on an equal footing.'' \41\ As a result, natural gas 
markets have changed from being highly regulated to being largely 
driven by competition and market forces. Instead of merchant pipelines 
delivering natural gas to customers at a Commission-regulated bundled 
price, most natural gas pipelines have exited the merchant business and 
now provide unbundled transportation and storage services. As a result, 
shippers are able to purchase natural gas at the wellhead or from gas 
marketers, trade gas among themselves, and purchase pipeline and 
storage capacity from marketers and other shippers in the secondary 
market as well as directly from the pipeline. These changes have 
benefitted natural gas consumers by providing a wider range of options 
in pipeline services.
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    \38\ 15 U.S.C. 3301-3432.
    \39\ Regulation of Natural Gas Pipelines After Partial Wellhead 
Decontrol, FERC Stats. & Regs. ] 30,665 (1985), vacated and 
remanded, Associated Gas Distribs. v. FERC, 824 F.2d 981 (D.C. Cir. 
1987), readopted on an interim basis, Order No. 500, FERC Stats. & 
Regs. ] 30,761 (1987), remanded, Am. Gas Ass'n v. FERC, 888 F.2d 136 
(D.C. Cir. 1989), readopted, Order No. 500-H, FERC Stats. & Regs. ] 
30,867 (1989), reh'g granted in part and denied in part, Order No. 
500-I, FERC Stats. & Regs. ] 30,880 (1990), aff'd in part and 
remanded in part, Am. Gas Ass'n v. FERC, 912 F.2d 1496 (D.C. Cir. 
1990), order on remand, Order No. 500-J, FERC Stats. & Regs. ] 
30,915, order on remand, Order No. 500-K, FERC Stats. & Regs. ] 
30,917, reh'g denied, Order No. 500-L (1991).
    \40\ Public Law 101-60, 103 Stat. 157 (1989).
    \41\ Pipeline Service Obligations and Revisions to Regulations 
Governing Self-Implementing Transportation; and Regulation of 
Natural Gas Pipelines After Partial Wellhead Decontrol, Order No. 
636, FERC Stats. & Regs. ] 30,939, at 30,391 (footnote omitted), 
order on reh'g, Order No. 636-A, FERC Stats. & Regs. ] 30,950, order 
on reh'g, Order No. 636-B, 61 FERC  61,272 (1992), order on 
reh'g, 62 FERC  61,007 (1993), aff'd in part and remanded 
in part sub nom. United Dist. Cos. v. FERC, 88 F.3d 1105 (D.C. Cir. 
1996), order on remand, Order No. 636-C, 78 FERC ] 61,186 (1997).
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    13. As natural gas commodity and transportation markets were 
becoming more competitive, the 1990s saw significant growth in natural 
gas consumption in the industrial and electric generation segments. 
This prompted jurisdictional natural gas companies to urge the 
Commission to expeditiously authorize new projects to meet anticipated 
growth in demand. Due to the lower capital costs and shorter 
construction times of advanced combined-cycle gas-fired plants in 
comparison with conventional coal-fired plants, and the relative 
environmental benefits of natural gas compared to coal combustion, 
industry forecasts at the time showed natural gas-fired electric 
generation demand tripling in the following twenty years and overall 
gas demand reaching 32 Trillion Cubic Feet (Tcf) by 2020.\42\
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    \42\ Energy Information Administration (EIA), Natural Gas 1998: 
Issues and Trends, DOE/EIA-0560(98), at 71, 109, 115 (Apr. 1999).
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    14. In addition, in the 1990s, many LDCs were going through 
significant changes as they implemented retail unbundling programs, 
also known as customer choice programs, on their systems. Prior to 
retail unbundling, LDCs, similar to interstate pipelines, provided a 
composite bundled service to customers that included the bundled price 
of the gas and associated pipeline capacity and the price of the 
distribution service. Retail unbundling programs provided residential 
and commercial customers with access to competitive markets through the 
ability to purchase gas supplies from retail marketers that may be 
different from their LDCs. As a result, LDCs were not certain to what 
degree they would continue to be responsible for purchasing gas 
supplies and pipeline capacity in order to provide service for their 
core retail customers. Because of

[[Page 18024]]

this uncertainty, many LDCs sought to reduce their firm contract 
commitments with interstate pipelines, both in terms of the duration 
and quantity of firm service (this reduction in service is referred to 
as capacity turnback). In light of the capacity turnback situation and 
potential stranded cost issues that arose on certain pipelines 
following restructuring, many LDCs were concerned about the impact any 
new pipeline expansion construction could have on the value of their 
existing pipeline capacity contracts, and the potential rate 
implications of overbuilding.\43\ These concerns were exacerbated by 
the fact that the Commission's pricing policy for new construction 
prior to the Policy Statement called for expansion project costs to be 
rolled into existing system costs to derive rolled-in rates in a future 
NGA section 4 rate case.\44\ At that time, the Commission generally 
ruled in favor of rolled-in rates when the cost impact of the expansion 
project, spread across the pipeline's system, resulted in a rate impact 
on existing customers of five percent or less and the expansion 
provided operational and/or financial benefits to the system.\45\ All 
shippers bore some burden of the expansion project's cost, whether they 
benefitted from the project or not, without being allowed to adjust 
their contracted volumes. LDCs and other parties believed that this 
pricing policy sent the wrong price signals by masking the real costs 
of an expansion project and could result in overbuilding of capacity 
and subsidization of an expansion by a pipeline's existing shippers.
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    \43\ See, e.g., Policy Statement, 88 FERC ] 61,227 at 61,741 
(summarizing comments from the American Gas Association, Baltimore 
Gas and Electric Company, and Philadelphia Gas Works requesting that 
pipelines not be allowed to impose the costs of unsubscribed 
capacity created through the construction of excess capacity on 
existing shippers).
    \44\ Pricing Policy for New and Existing Facilities Constructed 
by Interstate Natural Gas Pipelines, 71 FERC ] 61,241 (1995), order 
on reh'g, 75 FERC ] 61,105 (1996).
    \45\ Id., 71 FERC ] 61,241 at 61,916-61,917.
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D. Proceedings Leading to the Policy Statement, Purpose of the Policy 
Statement, and the Issues It Sought To Address

    15. In response to the concerns described above, the Commission 
issued the Notice of Proposed Rulemaking (NOPR), Regulation of Short-
Term Natural Gas Transportation Services,\46\ and the Notice of 
Inquiry, Regulation of Interstate Natural Gas Transportation 
Services,\47\ to explore issues related to its policies on 
certification and pricing of new construction projects. In the NOPR, 
the Commission asked questions relating to many of the issues that have 
arisen in recent certificate proceedings including: Whether the 
Commission should look behind the precedent agreements or contracts 
presented as evidence of market demand to assess independently the 
market's need for additional gas service; whether the Commission should 
apply a different standard to precedent agreements or contracts with 
affiliates than with non-affiliates; whether the Commission should, in 
an effort to check overbuilding and capacity turnback, take a harder 
look at proposals that are designed to compete for existing market 
share rather than bring service to a new customer base; and whether the 
Commission should apply a different standard to project sponsors who do 
not plan to use either federal or state-granted rights of eminent 
domain to acquire right-of-way.\48\
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    \46\ Regulation of Short-Term Natural Gas Transportation 
Services, Notice of Proposed Rulemaking, FERC Stats. & Regs. ] 
32,533 (1998) (cross-referenced at 84 FERC ] 61,085).
    \47\ Regulation of Interstate Natural Gas Transportation 
Services, Notice of Inquiry, FERC. Stats. & Regs. ] 35,533 (1998) 
(cross-referenced at 84 FERC ] 61,087).
    \48\ NOPR, FERC Stats. & Regs. ] 32,533 at 33,489-90.
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    16. Information received in these proceedings, as well as 
experience evaluating proposals for new pipeline construction, 
persuaded the Commission to revisit its policy for certificating new 
construction.\49\ The Commission issued the Policy Statement intending 
that it would provide the natural gas industry with guidance as to how 
the Commission would evaluate applications for new natural gas 
projects. The Commission sought ``to foster competitive markets, 
protect captive customers, and avoid unnecessary environmental and 
community impacts while serving increasing demands for natural gas.'' 
\50\
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    \49\ Policy Statement, 88 FERC ] 61,227 at 61,737.
    \50\ Id. at 61,743. These same aims apply to this Notice of 
Inquiry.
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    17. These objectives were realized primarily by a shift from 
rolled-in pricing to incremental pricing. Under incremental pricing, 
existing customers using existing facilities do not contribute to, and 
thereby do not subsidize, the cost of constructing and operating new 
projects.\51\ Applicants can recover the costs of the new facilities 
only from shippers who use them, and are fully at risk for the cost of 
the new facilities and will bear the financial burden of any 
unsubscribed capacity. In the Policy Statement, the Commission reasoned 
that incremental pricing would send the proper price signals for new 
construction and indicate whether a project is financially viable.\52\
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    \51\ The Policy Statement recognized there may be instances 
where expansion project costs should be rolled into the rates of 
existing customers; for example, when inexpensive expansibility is 
made possible because of earlier, costly construction. In such a 
case, ``because the existing customers bear the cost of the earlier, 
more costly construction in their rates, incremental pricing could 
result in the new customers receiving a subsidy from the existing 
customers because the new customers would not face the full cost of 
the construction that makes their new service possible.'' Policy 
Statement, 88 FERC ] 61,227 at 61,746.
    \52\ Id.
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    18. The Policy Statement stated that the Commission will approve an 
application for a new project only if its public benefits outweigh its 
residual adverse effects.\53\ The Policy Statement described this 
balancing of benefits and adverse effects as an economic test.\54\ In 
addition to the economic screen established by the Policy Statement, 
the Commission simultaneously considers the environmental impacts of a 
proposed project and imposes mitigation measures to address potential 
environmental impacts.
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    \53\ Id. at 61,745.
    \54\ Id.
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E. Changed Circumstances Since Issuance of the Policy Statement

    19. Over the last decade, the United States has seen an 
unprecedented change in the dynamics of the natural gas market and the 
supply and demand forces driving it. Led by advancements in production 
technologies, primarily in accessing shale reserves, natural gas 
supplies have increased dramatically. Domestic natural gas production 
has increased from 21.3 Tcf in 2010 to 26.9 Tcf in 2017.\55\ The Energy 
Information Administration's (EIA) Annual Energy Outlook 2018 forecasts 
continued supply growth over the next 25 years, increasing to nearly 39 
Tcf by 2035 and 43 Tcf by 2050.\56\ In addition, driven by liquefied 
natural gas (LNG) exports, increased pipeline exports to Mexico, and 
reduced imports from Canada, the EIA shows that the United States 
became a net exporter of natural gas in 2017.\57\
---------------------------------------------------------------------------

    \55\ EIA, Natural Gas Summary (Mar. 30, 2018) (in table see row 
labeled ``Dry Production;'' click link in the final column to view 
history) (Natural Gas Summary), https://www.eia.gov/dnav/ng/ng_sum_lsum_dcu_nus_a.htm.
    \56\ EIA, Annual Energy Outlook 2018, at tbl.13 (Feb. 6, 2018) 
(in table see row labeled ``Dry Gas Production'' under the reference 
case) (Annual Energy Outlook 2018), https://www.eia.gov/outlooks/aeo/data/browser/#/ ?id=13-AEO2018&cases=ref2018&sourcekey=0.
    \57\ Natural Gas Summary (in table compare rows labeled 
``Imports'' and ``Exports'').
---------------------------------------------------------------------------

    20. As natural gas production has increased, so has demand, rising 
from

[[Page 18025]]

24.1 Tcf in 2010 to 27.1 Tcf in 2017, driven in part by an increase in 
gas-fired electric generation.\58\ The EIA's 2018 Annual Energy Outlook 
projects continued growth in domestic demand to over 31.4 Tcf by 2035 
and nearly 35 Tcf by 2050.\59\
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    \58\ Id. (in table see row labeled ``Total Consumption;'' click 
link in the final column to view history).
    \59\ Annual Energy Outlook 2018, at tbl.13 (in table see row 
labeled ``Consumption by Sector'' under the reference case).
---------------------------------------------------------------------------

    21. Increases in both domestic and international demand for natural 
gas produced in the United States, combined with the availability of 
competitively-priced gas from shale reserves and associated gas 
extracted in tandem with oil, have reduced prices and price volatility 
and shifted the emphasis of the types of proposed natural gas 
infrastructure projects from storage to transportation and exports, 
leading to the Commission receiving and approving an increased number 
of pipeline and LNG export terminal applications since 2010.\60\ Much 
of the increased production is attributable to Appalachian shale 
deposits, predominately the Marcellus and Utica, located in 
Pennsylvania, West Virginia, Ohio, and New York.\61\ Although these 
areas have historically produced natural gas, the volumes had been 
relatively small and much of the infrastructure in the area was built 
to deliver natural gas to traditional regional markets and was not able 
to transport the burgeoning supply volumes to more distant markets 
without significant system expansions. In response to this take-away 
bottleneck, the Commission received a host of applications proposing 
either to construct greenfield pipelines \62\ to transport gas out of 
the region or to increase the capacity of existing infrastructure 
through the addition of compression and pipeline looping.\63\ Other 
producing areas have also experienced a dramatic growth in output 
starting in the mid-2000s, from traditional oil and gas fields in the 
Permian Basin in West Texas to the more recently developed Bakken Shale 
Formation in North Dakota. This increased production has also prompted 
applications to add capacity to transport gas to consumers.
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    \60\ In 2010, the Commission authorized about 24 pipeline 
projects comprising 9.2 billion cubic feet (Bcf) per day, 20 storage 
projects comprising 149 Bcf per day capacity with 5.6 Bcf per day 
deliverability, and no LNG import/export facilities. In 2017, the 
Commission authorized about 49 pipeline projects comprising 30.8 Bcf 
per day and 2 storage projects comprising no new capacity but 
increased deliverability. Between 2014 and 2017 the Commission also 
authorized 13 LNG import/export projects for 16 Bcf per day 
deliverability.
    \61\ New York's shale reserves remain undeveloped due to a 
prohibition on high-volume hydraulic fracturing in effect since 
2008.
    \62\ A greenfield pipeline is defined as a new pipeline system 
that is operated as a separately regulated company with its own 
rates and tariff. For example, the NEXUS Project is a greenfield 
pipeline. NEXUS Gas Transmission, LLC, 160 FERC ] 61,022 (2017).
    \63\ A pipeline loop is a segment of pipe constructed parallel 
to an existing pipeline to increase capacity. For example, Southern 
Natural Gas Company, L.L.C.'s Fairburn Expansion Project includes a 
1.6-mile-long, 30-inch-diameter pipeline loop to add capacity to the 
system. S. Nat. Gas Co., L.L.C., 162 FERC ] 61,122 (2018).
---------------------------------------------------------------------------

    22. In addition, contracting patterns are changing significantly as 
a result of the supply growth. In the past, LDCs contracted for a large 
percentage of the total interstate pipeline capacity, transporting 
supplies from the production area to their customers. Increasingly, 
however, LDCs are purchasing gas supplies further downstream at market 
area pooling points or their citygates as other parties increasingly 
contract for pipeline capacity. Natural gas producers are now 
contracting for an increasing amount of firm pipeline capacity on 
expansion projects in an effort to provide a secured commercial outlet 
for their supplies. For many of these projects, producers are 
interested in transporting their natural gas to the nearest pooling 
point on the pipeline system, where the gas can be sold to other 
parties serving downstream markets. Therefore, an increasing number of 
projects are being designed to transport gas to a point of distribution 
on the interstate pipeline grid, which may not correspond to a defined 
market or end use.

F. Executive Order 13807, ``Establishing Discipline and Accountability 
in the Environmental Review and Permitting Process for Infrastructure 
Projects''

    23. On August 15, 2017, President Trump issued Executive Order 
13807 ``Establishing Discipline and Accountability in the Environmental 
Review and Permitting Process for Infrastructure Projects'' to ``ensure 
that the Federal environmental review and permitting process for 
infrastructure projects is coordinated, predictable, and transparent.'' 
\64\ Executive Order 13807 states that inefficiencies in the project 
decision-making process, including the management of environmental 
reviews and permit decisions or authorizations, ``have delayed 
infrastructure investments, increased project costs, and blocked the 
American people from enjoying improved infrastructure that would 
benefit our economy, society, and environment.'' \65\ Executive Order 
13807 sets forth several components of its policy, including to 
``ensure that Federal authorities make informed decisions concerning 
the environmental impacts of infrastructure projects,'' ``provide 
transparency and accountability to the public regarding environmental 
review and authorization decisions,'' and ``make timely decisions with 
the goal of completing all Federal environmental reviews and 
authorization decisions for major infrastructure projects within 2 
years.'' \66\ The Commission is committed to carrying out the goals of 
Executive Order 13807 to improve the efficiency, timing, and overall 
predictability of the Commission's certification process.\67\
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    \64\ Exec. Order No. 13807, 82 FR 40463, 40463 (Aug. 15, 2017).
    \65\ Id.
    \66\ Id. Executive Order 13807 defines ``major infrastructure 
project'' as ``an infrastructure project for which multiple 
authorizations by Federal agencies will be required to proceed with 
construction, the lead Federal agency has determined that it will 
prepare an environmental impact statement'' under NEPA ``and the 
project sponsor has identified the reasonable availability of funds 
sufficient to complete the project.'' Id. 40464.
    \67\ The Commission is a signatory to the Memorandum of 
Understanding Implementing the One Federal Decision under Executive 
Order 13807, which is available at https://www.whitehouse.gov/wp-content/uploads/2018/04/MOU-One-Federal-Decision-m-18-13-Part-2.pdf.
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G. The Commission's Evaluation Under the Policy Statement

    24. The Policy Statement explained that the Commission will 
consider whether a proposed project's anticipated public benefits 
outweigh its residual adverse effects on economic interests. If so, the 
Commission will then complete an analysis of the project's 
environmental impacts and incorporate those findings in reaching a 
conclusion on whether a project is required by the public convenience 
and necessity. If not, an application will be denied and there will be 
no reason to consider environmental impacts.\68\
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    \68\ E.g., Turtle Bayou Gas Storage Co., LLC, 135 FERC ] 61,233 
(2014) (Turtle Bayou).
---------------------------------------------------------------------------

    25. Because the NEPA review typically takes longer than the review 
of the non-environmental aspects of a proposed project, in practice the 
Commission often initiates its study of environmental impacts at the 
applicant's request during pre-filing and before an application is 
filed. Also, most natural gas projects require approvals from numerous 
other federal, state, and local agencies or federally recognized Indian 
tribes.\69\ Coordinating with other agencies and ensuring that NEPA 
documents adequately address the

[[Page 18026]]

concerns of agencies, federally recognized tribes,\70\ and stakeholders 
can extend the time needed to complete the NEPA review process.
---------------------------------------------------------------------------

    \69\ For example, projects may require Clean Water Act section 
401 water quality certifications, Clean Air Act permits, and 
concurrence letters or Biological Opinions from the National Marine 
Fisheries Service or United States Fish and Wildlife Service.
    \70\ The Commission consults with potentially affected federally 
recognized Indian tribes as set forth in our tribal consultation 
policy statement. Policy Statement on Consultation with Indian 
Tribes in Commission Proceedings, Order No. 635, FERC Stats. & Regs. 
] 31,148 (2003) (cross-referenced at 104 FERC ] 61,108).
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H. Applying the Policy Statement

1. Threshold Requirement
    26. The Policy Statement's threshold requirement is that an 
applicant financially support the project without relying on 
subsidization from its existing customers.\71\ For greenfield projects, 
this is the case by definition, as these new projects have no existing 
customers.\72\ For existing jurisdictional natural gas companies, the 
Policy Statement's adoption of incremental rates as the default pricing 
mechanism for new capacity ensures that the project sponsor and its 
expansion customers bear all the economic risks of constructing and 
operating new facilities, without subsidization from the company's 
existing customers.\73\ When an existing natural gas company proposes 
to use its existing system rates as initial recourse rates for an 
expansion, the natural gas company is required to demonstrate that the 
incremental revenue received would exceed the incremental cost of the 
new project before being granted approval to roll the costs of the 
expansion into its system rates, thereby ensuring existing customers 
will not subsidize the expansion.\74\
---------------------------------------------------------------------------

    \71\ Policy Statement, 88 FERC ] 61,227 at 61,746.
    \72\ E.g., Sierrita Gas Pipeline, LLC, 147 FERC ] 61,192 (2014).
    \73\ Trailblazer Pipeline Co., 95 FERC ] 61,258 (2001); see also 
E. Tenn. Nat. Gas LLC, 154 FERC ] 61,161 (2016).
    \74\ The Policy Statement also allows projects that are designed 
to improve service to existing customers (i.e., by replacing 
existing capacity or improving reliability) to be rolled into system 
rates. The Policy Statement explained that increasing the rates of 
the existing customers to pay for these improvements is not a 
subsidy. Policy Statement, 88 FERC ] 61,227 at 61,746 n.12.
---------------------------------------------------------------------------

2. Factors To Be Balanced in Assessing the Need for a New Project
(a) Potential Adverse Effects on Affected Interests
    27. When the no-subsidy threshold requirement is met, the next step 
in the Commission's analysis is to determine whether the applicant has 
eliminated or minimized any residual adverse effects the project might 
have on: (1) The applicant's existing customers, (2) existing pipelines 
in the market and their captive customers, and (3) landowners and 
communities affected by the proposed project.\75\
---------------------------------------------------------------------------

    \75\ Id at 61,745.
---------------------------------------------------------------------------

    28. The Policy Statement recognized that the interests of an 
applicant's existing customers may be adversely affected if the 
proposed expansion results in a degradation in service for existing 
customers.\76\ Furthermore, the interests of an existing pipeline in 
the same market area and its captive customers may be adversely 
affected by a new competitor because, under the Commission's current 
rate model, customer rates on an existing pipeline can rise to cover 
the costs of any capacity that goes unsubscribed due to volumes (i.e., 
customers) migrating to a new competing pipeline.
---------------------------------------------------------------------------

    \76\ As part of the certification process the Commission 
confirms through engineering analyses that the proposed facilities 
are appropriately designed to provide the proposed new services and 
verifies that the proposed project will not adversely affect the 
services the applicant is obligated to provide to its existing 
customers. See, e.g., Tex. Gas Transmission, LLC, 152 FERC ] 61,160 
(2015).
---------------------------------------------------------------------------

    29. The Commission has historically taken a pro-competitive 
approach in approving new projects, believing that potential adverse 
impacts on existing competitors through the potential future loss of 
load are likely to be outweighed by the economic and reliability 
benefits to natural gas consumers that come from increased access to 
new supply sources of competitively-priced natural gas.\77\ The 
Commission's longstanding policy has been to allow companies to compete 
for markets and to uphold the results of that competition absent a 
showing of anticompetitive or unfair competition.\78\ There have been 
few instances where companies or their customers have raised concerns 
over the impact that the construction of a new project would have on an 
existing pipeline system or its captive customers. In those instances, 
competitor pipelines have argued that their captive shippers would be 
burdened with stranded costs or discount adjustments.\79\ The 
Commission has historically not been persuaded by the objections, 
finding that a new pipeline would benefit consumers through increased 
competition.\80\
---------------------------------------------------------------------------

    \77\ E.g., Ruby Pipeline, L.L.C., 128 FERC ] 61,224, at PP 37-39 
(2009); Guardian Pipeline, L.L.C., 91 FERC ] 61,285, at 61,976-
61,977 (2000).
    \78\ Ruby Pipeline, 128 FERC ] 61,224 at P 35; Guardian 
Pipeline, 91 FERC ] 61,285 at 61,977.
    \79\ Ruby Pipeline, 128 FERC ] 61,224 at PP 22-26; Guardian 
Pipeline, 91 FERC ] 61,285 at 61,974-61,975.
    \80\ Ruby Pipeline, 128 FERC ] 61,224 at P 37; Guardian 
Pipeline, 91 FERC ] 61,285 at 61,976-61,977.
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    30. Finally, under the Policy Statement, the Commission looks at 
adverse impacts on landowners and communities affected by a proposed 
project. The Policy Statement noted that ``[t]raditionally, the 
interests of the landowners and the surrounding community have been 
considered synonymous with the environmental impacts of a project,'' 
but explains that ``[l]andowner property rights issues are different in 
character from other environmental issues considered under [NEPA].'' 
\81\ Since issuance of the Policy Statement, the Commission's 
environmental analyses have come to adopt a more expansive 
consideration of property rights issues, so issues that previously 
might not have been routinely reviewed in the environmental document--
e.g., a project's potential impact on property values, community 
development, employment, tax revenue, and disadvantaged populations--
now are. Thus, these issues are, in effect, considered twice, once in 
the context of the Policy Statement assessment focusing on economic 
impacts, and again in the NEPA review focusing on environmental 
impacts. Economic impacts on landowners and surrounding communities can 
be, and often are, mitigated, for example, through alternative routing 
of the proposed rights-of-way, co-location with existing utility 
corridors, and negotiating the purchase of rights-of-way.\82\
---------------------------------------------------------------------------

    \81\ Policy Statement, 88 FERC ] 61,227 at 61,748.
    \82\ For example, Columbia Gas Transmission, LLC, incorporated 
eight route variations between issuance of the draft EIS and final 
EIS of its Leach XPress Project to address landowner requests. Final 
EIS, at 2-5 (Sept. 1, 2016) (Docket No. CP15-514-000). Also, 
Algonquin Gas Transmission, LLC, collocated 93 percent of its 
Algonquin Incremental Market Project pipeline facilities within or 
adjacent to existing right-of-ways, including its own pipelines, 
public roadways, railways and electric transmission line corridors. 
Final EIS, at 2-12 (Jan. 23, 2014) (Docket No. CP14-96-000).
---------------------------------------------------------------------------

(b) Public Benefits
    31. The Policy Statement identified various public benefits 
including: (1) Meeting unserved demand (2) eliminating bottlenecks; (3) 
providing access to new supplies; (4) lowering costs to consumers; (5) 
providing new interconnects that improve the interstate pipeline 
network; (6) providing competitive alternatives; (7) increasing 
electric reliability; and (8) advancing clean air objectives.\83\ As 
evidence of unserved demand following issuance of the Policy Statement, 
applicants have most often presented precedent agreements with 
prospective customers for long-term firm service.\84\
---------------------------------------------------------------------------

    \83\ Policy Statement, 88 FERC ] 61,227 at 61,748.
    \84\ In the order authorizing a new project, the Commission 
requires that prior to construction, the certificate-holder must 
file a written statement affirming that it has executed contracts 
that reflect the service commitments described in precedent 
agreements.

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[[Page 18027]]

(c) Balancing Public Benefits and Adverse Effects
    32. The Policy Statement recognized that, in the context of 
balancing public benefits against adverse effects, it is difficult to 
construct bright line standards or tests, as such tests are unlikely to 
be flexible enough to resolve specific cases and to allow the 
Commission to take into account different relevant interests. The 
Policy Statement described a sliding scale approach where the ``more 
interests adversely affected or the more adverse impact a project would 
have on a particular interest, the greater the showing of public 
benefits from the project required to balance the adverse impact.'' 
\85\
---------------------------------------------------------------------------

    \85\ Policy Statement, 88 FERC ] 61,227 at 61,749.
---------------------------------------------------------------------------

    33. The Policy Statement provided two examples of the sliding scale 
approach. First, if an applicant is able to acquire all or 
substantially all of the necessary rights-of-way by negotiation prior 
to filing the application, and the proposal is to serve a new, 
previously unserved market, it would not adversely impact the 
applicant's existing shippers, competing companies or their existing 
shippers, or affected landowners and communities.\86\ Under these 
circumstances, landowners would not be subject to eminent domain 
proceedings, and because the proposed project would be new, there would 
be no existing customers who might be called upon to subsidize the 
project. In the second example, the Policy Statement recognized that an 
applicant may not be able to acquire all the necessary rights-of-way by 
negotiation prior to filing the application.\87\ Therefore, the 
applicant might minimize the effect of the project on landowners by 
negotiating to acquire as much of the rights-of-way as possible. In 
this case, the applicant may be called upon to present some evidence of 
market demand, but under the sliding scale approach, the benefits that 
would need to be shown would be less than in a case where no rights-of-
way had been previously acquired by negotiation. If an applicant had 
precedent agreements with multiple parties for most of the new 
capacity, this would be strong evidence of market demand and potential 
public benefits that could outweigh the inability to negotiate right-
of-way agreements with some landowners.
---------------------------------------------------------------------------

    \86\ Id.
    \87\ Id.
---------------------------------------------------------------------------

    34. The Policy Statement observed that a few holdout landowners 
cannot veto a project if the applicant provides evidence of project 
benefits sufficient to justify a finding of public convenience and 
necessity and issuance of a certificate.\88\ The strength of the 
benefit showing will need to be proportional to the applicant's 
anticipated reliance on eminent domain to acquire necessary property 
rights. If the Commission finds project benefits will outweigh adverse 
impacts on economic interests, it then proceeds to consider the results 
of its NEPA review in reaching a decision on whether the proposed 
project is required by the public convenience and necessity.\89\
---------------------------------------------------------------------------

    \88\ Policy Statement, 88 FERC ] 61,227 at 61,749.
    \89\ In practice the environmental document is prepared 
concurrently with the analysis of the economic considerations. 
However, as described above, if a project's anticipated public 
benefits fail to outweigh its residual adverse effects on economic 
interests, the proposal will be denied and there will be no need to 
consider what the environmental impacts of the project would have 
been.
---------------------------------------------------------------------------

I. Commission Precedent and the Evolution of the Implementation of the 
Policy Statement

    35. Prior to adopting the Policy Statement, the Commission required 
applicants to show that some percentage of proposed capacity was 
subscribed under long-term firm service agreements.\90\ The Policy 
Statement adopted a new approach, under which the Commission would 
allow an applicant to rely on a variety of operational, economic, and 
environmental factors to demonstrate need.\91\ In practice, applicants 
have generally elected to present, and the Commission has accepted, 
customer commitments as the principal factor in demonstrating project 
need.\92\ Today, many proposed projects are fully, or nearly fully, 
subscribed under long-term firm service agreements that the Commission 
accepts as strong evidence that there is market demand for a proposed 
project.\93\ The Commission has not looked beyond contracts for a 
further determination of market or supply need since the adoption of 
incremental pricing and the resultant shifting of the risk of 
constructing new capacity to the pipeline and the expansion shippers. 
In instances where an applicant has neither entered into any precedent 
agreements for its project nor submitted other evidence to show need, 
and the project will cause adverse effects, the Commission has declined 
to issue a certificate.\94\
---------------------------------------------------------------------------

    \90\ E.g., El Paso Nat. Gas Co., 65 FERC ] 61,276, at 61,270-
61,271 (1993) (requiring applicant to submit ``long-term'' contracts 
or precedent agreements for a ``substantial amount'' of proposed 
firm transportation capacity); Tex. E. Transmission Corp., 82 FERC ] 
61,238, at 61,915-61,917 (1998) (explaining that a minimum level of 
25 percent evolved after El Paso Natural Gas).
    \91\ Policy Statement, 88 FERC ] 61,227 at 61,747 (``the 
Commission will consider all relevant factors reflecting on the need 
for the project. These might include, but would not be limited to, 
precedent agreements, demand projections, potential cost savings to 
consumers, or a comparison of projected demand with the amount of 
capacity currently serving the market.'').
    \92\ See, e.g., PennEast Pipeline Co., LLC, 162 FERC ] 61,053, 
at PP 27-36 (2018) (PennEast); Atlantic Coast Pipeline, LLC, 161 
FERC ] 61,042, at PP 56-63 (2017) (Atlantic Coast).
    \93\ Policy Statement, 88 FERC ] 61,227 at 61,743; see, e.g., 
PennEast, 162 FERC ] 61,053 (990,000 Dth/d of 1,107,000 Dth/d 
capacity subscribed); Mountain Valley Pipeline, LLC, 161 FERC ] 
61,043 (2017) (2,000,000 Dth/d fully subscribed); Atlantic Coast, 
161 FERC ] 61,042 (1,440,000 Dth/d of 1,500,000 Dth/d capacity 
subscribed); Rover Pipeline LLC, 158 FERC ] 61,109, at P 44 (2017) 
(3,100,000 Dth/d of 3,250,000 Dth/d capacity subscribed).
    \94\ See, e.g., Jordan Cove Energy Project, L.P., 154 FERC ] 
61,190, reh'g denied, 157 FERC ] 61,194 (2016); Turtle Bayou, 135 
FERC ] 61,233.
---------------------------------------------------------------------------

    36. Stakeholders in some proceedings have raised questions as to 
whether precedent agreements continue to be an appropriate indicator of 
project need and whether the Commission should reconsider its approach 
to examining project need. This includes both the question of the 
overall need for the proposed project within the energy marketplace, as 
well as the need for the capacity of individual project shippers. 
Specific concerns raised have included: (1) Whether existing 
infrastructure can accommodate the incremental service to be provided 
by proposed project; (2) whether anticipated demand in the project's 
markets will truly materialize; (3) the potential for renewable energy 
to meet future demand for electricity generation and its potential 
impacts on projects designed to serve natural gas-fired generators; (4) 
the need for the Commission to evaluate the new natural gas pipeline 
infrastructure on a region-wide basis; and (5) whether agreements with 
affiliates constitute a showing of market need.

II. The Commission's NEPA Review

    37. Since the early 2000s, the Commission has encouraged 
jurisdictional natural gas companies to use a voluntary pre-filing 
program for natural gas pipeline projects.\95\ During the pre-filing 
process, applicants can coordinate with Commission staff and other 
agencies to identify and resolve major environmental issues on a 
project before filing an application.\96\ Proposed

[[Page 18028]]

projects that would typically benefit from this pre-filing process have 
opted to use it. The pre-filing process allows applicants and staff to 
engage in enhanced and early outreach efforts with stakeholders, and 
often results in major and minor route modifications prior to the 
applicant submitting an application to avoid or minimize impacts on 
sensitive environmental resources identified by Commission staff, other 
agencies, federally recognized tribes, and affected landowners.\97\ In 
addition to enhanced outreach efforts, during the pre-filing process 
Commission staff performs site visits, consults other agencies and 
federally recognized tribes, reviews drafts of an applicant's 
environmental resource reports, and provides comments to applicants 
regarding alternatives, siting concerns, inaccuracies, additional 
surveys or studies, and needed mitigation plans to improve the quality 
of an application. These efforts routinely result in improvements and 
changes to the proposed projects compared to the applicants' initial 
plan when initiating the pre-filing process. In conducting its 
assessment of the economic effects of a proposed project after an 
application is filed, the Commission can include relevant information 
about residual adverse effects developed in the pre-filing process or 
during a concurrent environmental review.\98\
---------------------------------------------------------------------------

    \95\ In addition, in response to the Energy Policy Act of 2005, 
the Commission established pre-filing regulations, which are 
mandatory for LNG terminal facilities. 18 CFR 157.21.
    \96\ The Kern River 2003 Expansion Project (Docket No. CP01-422-
000) was the first project to use the Commission's Pre-filing 
Process.
    \97\ For example, after participating in the pre-filing process 
and holding over 200 meetings with public officials, as well as 15 
``informational sessions'' for impacted landowners, PennEast 
incorporated 70 of 101 identified route variations into its final 
proposed route. PennEast, 162 FERC ] 61,053 at P 39.
    \98\ The early elimination or refinement of proposals before and 
during Commission review leads to a high rate of project 
certification, subject to protective conditions. This does not 
demonstrate a bias in favor of certification, as past participants 
have claimed. See, e.g., NO Gas Pipeline v. FERC, 756 F.3d 764, 770 
(DC Cir. 2014) (``Presumably under most regulatory schemes, by the 
time applicants and their expert counsel have worked through 
changes, adaptations, and amendments, they are not likely to pursue 
many certificates that are hopeless. The fact that they generally 
succeed in choosing to expend their resources on applications that 
serve their own financial interests does not mean that an agency 
which recognizes merit in such applications is biased.''); Minisink 
Residents for Envtl. Pres. and Safety v. FERC, 762 F.3d 97, 108 n.7 
(DC Cir. 2014) (Minisink) (same).
---------------------------------------------------------------------------

    38. In reviewing an application, the Commission currently performs 
a lengthy NEPA review, including numerous opportunities for public 
involvement, consultation with other federal, state, and local 
agencies, and an independent evaluation of the environmental impacts of 
a proposed project. In July 2015, the Commission issued guidance on 
best practices for stakeholder outreach programs for natural gas 
projects.\99\ This guidance identifies the various opportunities for 
public engagement by project applicants and Commission staff throughout 
the pre-filing and NEPA review process, including project briefings to 
elected officials, open houses, scoping sessions, agency meetings, site 
visits, and NEPA document comment periods.
---------------------------------------------------------------------------

    \99\ FERC, Suggested Best Practices for Industry Outreach 
Programs to Stakeholders, (2015), https://www.ferc.gov/industries/gas/enviro/guidelines/stakeholder-brochure.pdf. See also FERC, 
Guidelines for Reporting on Cultural Resources Investigations for 
Natural Gas Projects (2017), https://www.ferc.gov/industries/gas/enviro/guidelines/cultural-guidelines-final.pdf.
---------------------------------------------------------------------------

    39. Commission staff performs a thorough independent review of the 
environmental impacts of a proposed project through verifying submitted 
information and comments, issuing information requests to clarify 
inaccuracies or obtain additional information, and consulting with 
federal, state, and local agencies and federally recognized tribes. 
Commission NEPA documents address impacts on various environmental 
resources, including geology, soils, groundwater, surface water, 
wetlands, aquatic resources, vegetation, wildlife, special status 
species, cultural resources, land use, recreation, aesthetics, 
socioeconomics, air quality, climate change, noise, and reliability and 
safety.
    40. Over the past decade there has been a marked increase in the 
involvement of federally recognized tribes, affected landowners, and 
environmental organizations in proposed natural gas project 
proceedings. Concerns raised have primarily focused on the need for new 
projects, alternatives, cumulative impacts, and the effects related to 
the production and consumption of natural gas (particularly the 
contribution of GHG emissions to global climate change).

A. Alternatives

    41. The Commission's NEPA documents address a wide variety of 
alternatives. These include the no-action alternative (i.e., the status 
quo), system alternatives (using existing, modified, or other proposed 
gas facilities), design alternatives (using a different pipeline 
diameter, looping versus compression, and electric-driven versus gas-
driven compressor equipment), and route and siting alternatives that 
could satisfy the purpose and need of the proposed project. 
Alternatives considered include those contemplated by the applicant and 
those proposed by agencies, federally recognized tribes, stakeholders, 
and Commission staff.
    42. Should the Commission find that there is insufficient support 
for the need for a project, it could select the no-action alternative 
by rejecting the proposed project. However, the Commission has neither 
authority to require the construction of any alternative other than the 
project proposed, nor does it have authority to require the development 
of nonjurisdictional actions or projects (e.g., renewable projects or 
energy conservation measures). When an alternative is not reasonable, 
i.e., when it cannot function as a substitute for the proposed project, 
the Commission does not consider it in its NEPA analysis.

B. GHG Emissions and Climate Change

    43. GHG emissions are unique in that, unlike other environmental 
impacts studied in pipeline proceedings that have localized effects, 
emissions from around the globe accumulate in the atmosphere and 
contribute to climate change impacts worldwide.\100\ In 2010, CEQ 
issued its first draft guidance on how federal agencies can consider 
the effects of GHG emissions and climate change under NEPA.\101\ CEQ 
revised the draft guidance in 2014,\102\ and issued final guidance in 
2016.\103\ Throughout the guidance's evolution, CEQ consistently 
advised agencies to quantify GHG emissions and consider both the extent 
to which a proposed project's GHG emissions would contribute to climate 
change and also how a changing climate may impact the proposed project 
in their NEPA documents. In April 2017, CEQ rescinded its 2016 final 
guidance as directed by Executive Order 13783

[[Page 18029]]

Promoting Energy Independence and Economic Growth.\104\
---------------------------------------------------------------------------

    \100\ On December 15, 2009, the Environmental Protection Agency 
(EPA) defined air pollution to include the mix of six long-lived and 
directly emitted GHGs, finding that the presence of GHGs in the 
atmosphere may endanger public health and welfare through climate 
change. Endangerment Finding and Cause or Contribute Findings for 
Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 FR 
66496 (Dec. 15, 2009).
    \101\ CEQ, Draft NEPA Guidance on Consideration of the Effects 
of Climate Change and Greenhouse Gas Emissions, (Feb. 18, 2010), 
https://ceq.doe.gov/docs/ceq-regulations-and-guidance/20100218-nepa-consideration-effects-ghg-draft-guidance.pdf.
    \102\ Revised Draft Guidance for Federal Departments and 
Agencies on Consideration of Greenhouse Gas Emissions and the 
Effects of Climate Change in NEPA Reviews, 79 FR 77802 (Dec. 18, 
2014) (Revised Draft GHG Guidance).
    \103\ CEQ, Final Guidance for Federal Departments and Agencies 
on Consideration of Greenhouse Gas Emissions and the Effects of 
Climate Change in National Environmental Policy Act Reviews, (Aug. 
1, 2016) (Final GHG Guidance), https://ceq.doe.gov/docs/ceq-regulations-and-guidance/nepa_final_ghg_guidance.pdf.
    \104\ Exec. Order No. 13783, 82 FR 16576 (Apr. 5, 2017).
---------------------------------------------------------------------------

    44. Since CEQ issued its initial draft guidance, Commission staff 
has addressed climate change in its NEPA documents. Over the past seven 
years, Commission staff has expanded its efforts to address GHG 
emissions and climate change by including GHG emission estimates from 
project construction (e.g., tailpipe emissions from construction 
equipment) and operation (e.g., fuel combustion from compressor 
stations and gas venting and leaks). The Commission's NEPA documents 
also currently include any mitigation measures the applicant will 
employ to reduce GHG emissions, including mitigation of methane leaks. 
Such measures predominantly take the form of best practices and 
specific technologies developed under the EPA's Natural Gas STAR 
Program.\105\ Further, the Commission's NEPA documents discuss the 
regulations under the Clean Air Act applicable to GHG emissions, 
recognize that natural gas infrastructure projects contribute GHG 
emissions that affect global climate change, identify the existing and 
projected climate change impacts occurring in a project's geographic 
region, and explain the impacts that climate change may have on a 
specific project (e.g., future sea level rise and storm surge).\106\ 
Current and projected regional climate change impacts are based on the 
most recently issued National Climate Assessment \107\ by the United 
States Global Change Research Program.\108\ The current assessment 
provides a regional analysis of climate change for eight defined United 
States regions: Northeast, Southeast, Northwest, Southwest, Midwest, 
Great Plains, Coasts, and Alaska.
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    \105\ EPA's Natural Gas STAR program is a voluntary partnership 
between the EPA and industry to ``encourage oil and natural gas 
companies to adopt cost-effective technologies and best practices 
that improve operational efficiency and reduce methane emissions.''
    \106\ 42 U.S.C. 7401-7671q.
    \107\ The current report is the Third National Climate 
Assessment, issued in May 2014. https://nca2014.globalchange.gov/. 
The United States Global Change Research Program anticipates 
releasing the Fourth National Climate Assessment in late 2018.
    \108\ The United States Global Change Research Program consists 
of 13 federal agencies and is overseen by the Subcommittee on Global 
Change Research of the National Science and Technology Council's 
Committee on Environment, Natural Resources and Sustainability, and 
the White House Office of Science and Technology Policy. The federal 
agencies are the Departments of Agriculture, Commerce, Defense, 
Energy, Health and Human Services, Interior, State, and 
Transportation, as well as the EPA, the National Aeronautics and 
Space Administration, the National Science Foundation, the 
Smithsonian Institution, and the United States Agency for 
International Development.
---------------------------------------------------------------------------

    45. To the extent there exist relevant federal, regional, state, 
tribal, or local plans, policies, or laws for GHG emissions reductions 
or climate adaptations, the Commission's NEPA documents address the 
consistency of a proposed project's direct impacts (e.g., compressor 
station emissions) with those known climate goals. Individual plans may 
range in scope and specificity from, for example, general commitments 
to reduce GHG emissions, to particular plans to reduce GHG emissions by 
sector, as well as plans to adapt to a changing climate.
    46. Historically, CEQ recognized the difficulty in identifying the 
extent to which a specific action or project may contribute to overall 
climate change, given that climate change results from the cumulative 
buildup of carbon dioxide and other GHGs, rather than from the 
incremental emissions of any one project. Additionally, there is no 
standard established by international or federal policy, or by a 
recognized scientific body that the Commission could rely on in 
determining whether project-specific GHG emissions are significant. 
Thus, the Commission has stated that, given the information available 
to date, any attempt by the Commission to create a significance 
threshold would be arbitrary.\109\ CEQ's revised draft and final 
guidance cautioned agencies about calculating a proposed project's 
emissions as a percentage of sector, nationwide, or global emissions in 
determining significance, ``unless the agency determines that such 
information would be helpful to decision makers and the public to 
distinguish among alternatives and mitigations. . . . .'' \110\ 
Generally, this percentage would be too low to be considered meaningful 
because project emissions would be miniscule compared to nationwide or 
global emissions. CEQ's past guidance also stated that agencies need 
not undertake new research or analysis of potential climate change in 
the proposed project area, but may instead summarize and incorporate by 
reference the relevant scientific literature.\111\
---------------------------------------------------------------------------

    \109\ Fla. Se. Connection, LLC, 162 FERC ] 61,233, at PP 26-27 
(2018) (LaFleur and Glick, Comm'rs, dissenting).
    \110\ Revised Draft GHG Guidance, 79 FR at 77808; accord Final 
GHG Guidance at 11, 15-16.
    \111\ Final GHG Guidance at 22.
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    47. In recent years, commenters began raising GHG issues on an 
increasingly frequent basis in Commission proceedings and on appellate 
review, with emphasis on upstream and downstream GHG emissions.\112\ 
Some commenters suggest that the Commission's current analyses of GHG 
emissions and climate change are inadequate. They argue that all 
projects relying on fossil fuels should be considered to cause a 
significant impact on climate change. Commenters also request that the 
Commission employ the Social Cost of Carbon tool \113\ to monetize 
climate change impacts from estimated GHG emissions.
---------------------------------------------------------------------------

    \112\ See, e.g., Atlantic Coast, 161 FERC ] 61,042; 
Transcontinental Gas Pipe Line Co., LLC, 158 FERC ] 61,125, order 
amending certificate, 159 FERC ] 62,181, order on reh'g, 161 FERC ] 
61,250 (2017), order denying reh'g, 162 FERC ] 61,192 (2018).
    \113\ See generally Interagency Working Group on Social Cost of 
Carbon, United States Government, Technical Support Document: 
Technical Update of the Social Cost of Carbon for Regulatory Impact 
Analysis Under Executive Order 12866 (Aug. 2016), https://www.epa.gov/sites/production/files/2016-12/documents/sc_co2_tsd_august_2016.pdf.
---------------------------------------------------------------------------

    48. The Commission has generally declined to consider the upstream 
or downstream GHG emissions impacts of natural gas production or end 
use as indirect impacts of the proposed project because the Commission 
found no requisite causation and/or because the impacts of such 
production or end use were speculative and unknown, and therefore not 
reasonably foreseeable.\114\ With respect to the cumulative impacts 
analysis in which causation is not relevant, no analysis of GHG 
emissions from upstream and downstream activities was included except 
where identified upstream production wells (new) or end-use facilities 
(existing or proposed) were within the geographic and temporal scope of 
the proposed project's direct and indirect impacts.\115\
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    \114\ See, e.g., Cent. N.Y. Oil & Gas Co., 137 FERC ] 61,121, at 
PP 95-105, on reh'g, 138 FERC ] 61,104, at PP 46-48 (2012), aff'd 
sub nom. Coal. For Responsible Growth & Res. Conservation v. FERC, 
485 F. App'x 472 (2d Cir. 2012) (unpublished opinion).
    \115\ For example, in the EIS for the proposed Aguirre Offshore 
GasPort, a jurisdictional floating storage regasification unit and 
subsea pipeline to deliver gas to an existing non-jurisdictional 
generating complex, Commission staff disclosed the expected 
emissions, including GHG emissions, from both the jurisdictional 
project and non-jurisdictional generating station. Final EIS for the 
Aquirre Offshore GasPort Project,-- at 4-221, tbl.4.12.2-1 (Feb. 20, 
2015) (Docket No. CP13-193-000).
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    49. In late 2016 the Commission began providing the public with 
additional information, beyond the requirements of NEPA and its 
implementing regulations, regarding potential impacts associated with 
upstream unconventional natural gas production and downstream natural 
gas combustion even where the criteria of causation and reasonable 
foreseeability

[[Page 18030]]

were absent.\116\ Recent studies identify, on a generic, high-level 
basis, potential environmental impacts associated with natural gas 
production and natural gas-fired power generation.\117\ In Commission 
orders for projects intended to transport gas produced from the 
Marcellus and Utica shales, the Commission used this information to 
provide general estimates of production-related GHG emissions, such as 
methane released from wells and gathering facilities, and production-
related land disturbance and water consumption.\118\ The Commission 
estimated downstream GHG emissions by assuming the full combustion of 
the total volume of gas capable of being transported by the project, 
typically as part of the cumulative impact analysis.\119\ The 
Commission described the full combustion estimate as a worst-case 
scenario that is unlikely to reflect actual impacts.\120\ However, in a 
recent order, DTE Midstream Appalachia, LLC,\121\ the Commission did 
not include information on upstream, production-related impacts, 
stating that ``[a] broad analysis, based on generalized assumptions 
rather than specific information, will not provide meaningful 
assistance to the Commission in its decision making, e.g., evaluating 
potential alternatives to a specific proposal.'' \122\
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    \116\ See, e.g., Columbia Gas Transmission, LLC, 158 FERC ] 
61,046, at PP 116-120 (2017).
    \117\ E.g., National Energy Technology Laboratory, U.S. 
Department of Energy, Life Cycle Analysis of Natural Gas Extraction 
and Power Generation, DOE/NETL-2015/1714 (2016), https://www.netl.doe.gov/energy-analyses/temp/LifeCycleAnalysisofNaturalGasExtractionandPowerGeneration_083016.pdf.

    \118\ E.g., PennEast, 162 FERC ] 61,053 at PP 193-210; 
Millennium Pipeline Co., LLC, 161 FERC ] 61,229, PP 151-165 (2017) 
(Millennium).
    \119\ This information was initially included in certificate 
orders (in cases where NEPA documents had already been finalized), 
and subsequently in new NEPA documents. Typically, the end use of 
the gas to be transported by a project is not known.
    \120\ E.g., Millennium, 161 FERC ] 61,229, at P 164 (2017) (``We 
note that this CO2e [carbon dioxide equivalents] estimate represents 
an upper bound for the amount of end-use combustion that could 
result from the gas transported by this project. This is because 
some of the gas may displace other fuels (i.e., fuel oil and coal) 
that could result in lower total CO2e emissions. It may also 
displace gas that otherwise would be transported via different 
systems, resulting in no change in CO2e emissions, or be used as a 
feedstock. This estimate also assumes the maximum capacity is 
transported 365 days per year, which is rarely the case because many 
projects are designed for peak use.
    Consequently, it is unlikely that this total amount of GHG 
emissions would occur, and emissions are likely to be significantly 
lower than the above estimate.'').
    \121\ 162 FERC ] 61,238 (2018) (LaFleur and Glick Comm'rs, 
dissenting).
    \122\ Id. at P 54 (footnote omitted).
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    50. As for the use of the Social Cost of Carbon tool, the 
Commission has found that although this tool is appropriate to use as 
part of cost-benefit analyses associated with certain rulemakings, it 
is not useful or appropriate to apply in its NEPA documents.\123\
---------------------------------------------------------------------------

    \123\ Fla. Se. Connection, 162 FERC ] 61,233 at PP 37-38 
(LaFleur and Glick, Comm'rs, dissenting).
---------------------------------------------------------------------------

III. Request for Comments

    51. As part of ensuring that the Commission continues to meet its 
statutory obligations, the Commission, on occasion, engages in public 
inquiry to gauge whether there is a need to add to, modify, or 
eliminate certain policies or regulatory requirements. In this 
proceeding, the Commission seeks comments on potential modifications to 
its approach to determining whether a proposed project is required by 
the public convenience and necessity. The Commission has identified 
four general areas of examination in this inquiry: (1) The reliance on 
precedent agreements to demonstrate need for a proposed project; (2) 
the potential exercise of eminent domain and landowner interests; (3) 
the Commission's evaluation of alternatives and environmental effects 
under NEPA and the NGA; and (4) the efficiency and effectiveness of the 
Commission's certificate processes. The Commission seeks comment on the 
questions set forth below, organized according to these four broad 
categories. Commenters need not answer every question enumerated below.

A. Potential Adjustments to the Commission's Determination of Need

    52. In practice, the Commission does not look ``behind'' or 
``beyond'' precedent agreements when making a determination about the 
need for new projects or the needs of the individual shippers. The 
United States Court of Appeals for the District of Columbia Circuit 
recently found ``nothing in the policy statement or in any precedent 
construing it to suggest that it requires, rather than permits, the 
Commission to assess a project's benefits by looking beyond the market 
need reflected by the applicant's existing contracts with shippers.'' 
\124\
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    \124\ Myersville Citizens for a Rural Cmty. Inc. v FERC, 783 
F.3d 1301, 1311 (D.C. Cir. 2015) (citing Minisink, 762 F.3d at 111 
n.10).
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    53. In retail gas distribution markets, state regulators review LDC 
commodity and capacity purchases. State regulators also may review 
electric distribution company fuel purchases. Thus, in these regions, 
state regulators may review the purchases to determine the prudence of 
expenditures by the utilities they regulate. For parties purchasing 
interstate transportation capacity who are not subject to state 
regulatory oversight, the fact that a purchaser is fully at risk for 
the cost of the capacity and cannot directly pass through the costs to 
another party has lessened the need to scrutinize such agreements.
    To date, the Commission has not distinguished between affiliate and 
non-affiliate precedent agreements in considering the need for a 
proposed project.\125\
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    \125\ See, e.g., E. Shore Nat. Gas Co., 132 FERC ] 61,204, at P 
31 (2010); Millennium Pipeline Co., L.P., 100 FERC ] 61,277, at P 57 
(2002).
---------------------------------------------------------------------------

    54. However, recent changes in the gas industry, whereby producers 
are contracting for an increasing amount of transportation capacity as 
well as an increase in the number of shippers that are affiliated with 
the pipeline companies, have raised questions among some entities as to 
whether precedent agreements remain an appropriate indicator of need 
and whether the Commission should examine additional information in 
evaluating the need for proposed pipeline infrastructure projects. 
Accordingly, comments are requested on the following questions.

A1. Should the Commission consider changes in how it determines 
whether there is a public need for a proposed project?
A2. In determining whether there is a public need for a proposed 
project, what benefits should the Commission consider? For example, 
should the Commission examine whether the proposed project meets 
market demand, enhances resilience or reliability, promotes 
competition among natural gas companies, or enhances the functioning 
of gas markets?
A3. Currently, the Commission considers precedent agreements, 
whereby entities intending to be shippers on the contemplated 
pipeline commit contractually to such shipments, to be strong 
evidence that there is a public need for a proposed project. If the 
Commission were to look beyond precedent agreements, what types of 
additional or alternative evidence should the Commission examine to 
determine project need? What would such evidence provide that cannot 
be determined with precedent agreements alone? How should the 
Commission assess such evidence? Is there any heightened litigation 
risk or other risk that could result from any broadening of the 
scope of evidence the Commission considers during a certificate 
proceeding? If so, how should the Commission safeguard against or 
otherwise address such risks?
A4. Should the Commission consider distinguishing between precedent 
agreements with affiliates and non-affiliates in considering the 
need for a proposed project? If so, how?
A5. Should the Commission consider whether there are specific 
provisions or

[[Page 18031]]

characteristics of the precedent agreements that the Commission 
should more closely review in considering the need for a proposed 
project? For example, should the term of the precedent agreement 
have any bearing on the Commission's consideration of need or should 
the Commission consider whether the contracts are subject to state 
review?
A6. In its determinations regarding project need, should the 
Commission consider the intended or expected end use of the natural 
gas? Would consideration of end uses better inform the Commission's 
determination regarding whether there is a need for the project? 
What are the challenges to determining the ultimate end use of the 
new capacity a shipper is contracting for? How could such challenges 
be overcome?
A7. Should the Commission consider requiring additional or 
alternative evidence of need for different end uses? What would be 
the effect on pipeline companies, consumers, gas prices, and 
competition? Examples of end uses could include: LDC contracts to 
serve domestic use; contracts with marketers to move gas from a 
production area to a liquid trading point; contracts for 
transporting gas to an export facility; projects for reliability 
and/or resilience; and contracts for electric generating resources.
A8. How should the Commission take into account that end uses for 
gas may not be permanent and may change over time?
A9. Should the Commission assess need differently if multiple 
pipeline applications to provide service in the same geographic area 
are pending before the Commission? For example, should the 
Commission consider a regional approach to a needs determination if 
there are multiple pipeline applications pending for the same 
geographic area? Should the Commission change the way it considers 
the impact of a new project on competing existing pipeline systems 
or their captive shippers? If so, what would that analysis look like 
in practice?
A10. Should the Commission consider adjusting its assessment of need 
to examine (1) if existing infrastructure can accommodate a proposed 
project (beyond the system alternatives analysis examined in the 
Commission's environmental review); (2) if demand in a new project's 
markets will materialize; or (3) if reliance on other energy sources 
to meet future demand for electricity generation would impact gas 
projects designed to supply gas-fired generators? If so, how?

B. The Exercise of Eminent Domain and Landowner Interests

    55. The Policy Statement described how the Commission takes into 
account the extent to which an applicant expects to acquire property 
rights by relying on eminent domain in determining whether a proposed 
project is needed. Although Commission authorization of a project 
through the issuance of a certificate of public convenience and 
necessity under the NGA conveys the right of eminent domain, the 
Commission itself does not grant the use of eminent domain across 
specific properties. Only after the Commission authorizes a project can 
the project sponsor assert the right of eminent domain for outstanding 
lands for which it could not negotiate an easement.
    56. Recently, the Commission has been seeing more proposed projects 
where applicants are unable to access potential rights-of-way prior to 
the Commission's decision on an application, which limits the 
information that can be included in an application.
    57. Historically, an applicant's inability to complete on-site 
survey work has not precluded the Commission from completing a 
meaningful review of a proposal since partial on-site surveys, in 
combination with aerial overflight and data from other sources, can 
provide an adequate basis for the Commission to reach an informed 
decision. The Commission's NEPA documents are based on the best 
available data at the time of development.\126\ When information from 
other data sources is used to complete a NEPA review, the Commission 
routinely conditions its authorizations requiring applicants to perform 
on-site surveys to verify this information, prior to construction. In 
addition, the Commission has developed standard and effective 
construction mitigation, and restoration and rehabilitation procedures 
applicable to wetlands and waterbodies, cultural resources, and 
endangered, threatened, and special concern species.\127\ Because 
project sponsors must adhere to these established procedures, if survey 
work is incomplete at the time a Commission certificate order is 
issued, these procedures assure that impacts on resources are 
adequately minimized during construction. The Commission invites 
comments on the following questions.
---------------------------------------------------------------------------

    \126\ An agency reasonably uses ``the best information available 
when it [begins] its analysis and then check[s] the assumptions . . 
. as new information [becomes] available . . . .'' Village of 
Bensenville v. FAA, 457 F.3d 52, 71 (DC Cir. 2006). See also 40 CFR 
1502.22(b)(3) (if relevant information is unavailable, ``the agency 
shall include . . . a summary of existing credible scientific 
evidence'') (emphasis added).
    \127\ The Commission's Upland Erosion Control, Revegetation, and 
Maintenance Plan establishes baseline mitigation measures that 
project sponsors must implement, except when specifically exempted 
by Commission staff, to minimize erosion and enhance revegetation 
associated with their proposed projects. https://www.ferc.gov/industries/gas/enviro/plan.pdf. The Commission's Wetland and 
Waterbody Construction and Mitigation Procedures establishes 
baseline mitigation measures that project sponsors must implement, 
except when specifically exempted by Commission staff, to minimize 
the extent and duration of project-related disturbance on wetlands 
and waterbodies. https://www.ferc.gov/industries/gas/enviro/procedures.pdf.

B1. Should the Commission consider adjusting its consideration of 
the potential exercise of eminent domain in reviewing project 
applications? If so, how should the Commission adjust its approach?
B2. Should applicants take additional measures to minimize the use 
of eminent domain? If so, what should such measures be? How would 
that affect a project's overall costs? How could such a requirement 
affect an applicant's ability to adjust a proposed route based on 
public input received during the Commission's project review?
B3. For proposed projects that will potentially require the exercise 
of eminent domain, should the Commission consider changing how it 
balances the potential use of eminent domain against the showing of 
need for the project? Since the amount of eminent domain used cannot 
be established with certainty until after a Commission order is 
issued, is it possible for the Commission to reliably estimate the 
amount of eminent domain a proposed project may use such that the 
Commission could use that information during the consideration of an 
application?
B4. Does the Commission's current certificate process adequately 
take landowner interests into account? Are there steps that 
applicants and the Commission should implement to better take 
landowner interests into account and encourage landowner 
participation in the process? If so, what should the steps be?
B5. Should the Commission reconsider how it addresses applications 
where the applicant is unable to access portions of the right-of-
way? Should the Commission consider changes in how it considers 
environmental information gathered after an order authorizing a 
project is issued?

C. The Commission's Consideration of Environmental Impacts

    58. Among the goals in the Policy Statement is the avoidance of 
unnecessary disruption of the environment. The Commission incorporates 
a proposed project's environmental impacts into the balance of factors 
under the public convenience and necessity standard. Although the 
Commission performs a comprehensive and independent NEPA review, as 
described above, there has been increased stakeholder interest 
regarding the alternatives that the Commission evaluates in its public 
interest determination, how the Commission addresses climate change, 
and the evolving science behind GHG emissions and climate change. 
Therefore, the Commission invites comments on the following ways that 
the Commission could review its environmental evaluations within the 
bounds of NEPA and the NGA:

[[Page 18032]]

C1. NEPA and its implementing regulations require an agency to 
consider reasonable alternatives to the proposed action. Currently 
the Commission considers the no-action alternative, system 
alternatives, design alternatives, and route alternatives. Should 
the Commission consider broadening its environmental analysis to 
consider alternatives beyond those that are currently included? If 
so, what specific types of additional alternatives should the 
Commission consider?
C2. Are there any environmental impacts that the Commission does not 
currently consider in its cumulative impact analysis that could be 
captured with a broader regional evaluation? If so, how broadly 
should regions be defined (e.g., which states or geographic 
boundaries best define different regions), and which environmental 
resources considered in NEPA would be affected on a larger, regional 
scale?
C3. In conducting an analysis of a project, should the Commission 
consider calculating the potential GHG emissions from upstream 
activities (e.g., the drilling of natural gas wells)? What 
information would be necessary for the Commission to reliably and 
accurately conduct this calculation? Should the Commission also 
evaluate the significance of these upstream impacts? If so, what 
criteria would be used to determine the significance of these 
impacts?
C4. In conducting an analysis of a project, should the Commission 
consider calculating the potential GHG emissions from the downstream 
consumption of the gas? If so, should the Commission base this 
calculation on total consumption, or some other amount? What 
information would be necessary for the Commission to reliably and 
accurately conduct this calculation? Should the Commission also 
evaluate the significance of these downstream impacts? If so, what 
criteria would be used to determine the significance of these 
impacts?
C5. How would additional information related to the GHG impacts 
upstream or downstream of a proposed project inform the Commission's 
decision on an application? What topics or criteria should be 
included in this additional information?
C6. As part of the Commission's public interest determination, 
should the Commission consider changing how it weighs a proposed 
project's adverse environmental impacts against favorable economic 
benefits to determine whether the proposed project is required by 
the public convenience and necessity and still provide regulatory 
certainty to stakeholders?
C7. Should the Commission reconsider how it uses the Social Cost of 
Carbon tool in its environmental review of a proposed project? How 
could the Commission use the Social Cost of Carbon tool in its 
weighing of the costs versus benefits of a proposed project? How 
could the Commission acquire complete information to appropriately 
quantify all of the monetized costs/negative impacts and monetized 
benefits of a proposed project?

D. Improvements to the Efficiency of the Commission's Review Process

    59. It is the Commission's desire to improve the transparency, 
timing, and predictability of the Commission's certification 
process.\128\ In addition, as noted above, Executive Order 13807 
encourages agencies to make timely decisions with the goal of 
completing all Federal environmental reviews and authorization 
decisions for major infrastructure projects within 2 years. 
Inefficiencies in project decision-making can delay infrastructure 
investments, increase project costs, and block infrastructure that 
would benefit the economy.
---------------------------------------------------------------------------

    \128\ E.g., Tenn. Gas Pipeline Co., L.L.C., 162 FERC ] 61,167, 
at PP 49-51 (2018) (order addressing timely intervention).
---------------------------------------------------------------------------

    60. The Commission seeks comment on the following questions 
regarding its certificate application review process:

D1. Should certain aspects of the Commission's application review 
process (i.e., pre-filing, post-filing, and post-order-issuance) be 
shortened, performed concurrently with other activities, or 
eliminated, to make the overall process more efficient? If so, what 
specific changes could the Commission consider implementing?
D2. Should the Commission consider changes to the pre-filing 
process? How can the Commission ensure the most effective 
participation by interested stakeholders during the pre-filing 
process and how would any such changes affect the implementation and 
duration of the pre-filing process?
D3. Are there ways for the Commission to work more efficiently and 
effectively with other agencies, federal and state, that have a role 
in the certificate review process? If so, how?
D4. Are there classes of projects that should appropriately be 
subject to a shortened process? What would the shortened process 
entail?

IV. Comment Procedures

    61. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this notice, including any related 
matters or alternative proposals that commenters may wish to discuss. 
Comments are due June 25, 2018. Comments must refer to Docket No. PL18-
1-000, and must include the commenter's name, the organization they 
represent, if applicable, and their address in their comments.
    62. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's website at http://www.ferc.gov. The Commission accepts most standard word-processing 
formats. Documents created electronically using word-processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    63. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE, 
Washington, DC 20426.
    64. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

V. Document Availability

    65. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. eastern time) at 888 First Street NE, Room 2A, 
Washington, DC 20426.
    66. From the Commission's Home Page on the internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    67. User assistance is available for eLibrary and the Commission's 
website during normal business hours from the Commission's Online 
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at 
fercon[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

    By direction of the Commission.

    Issued: April 19, 2018.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2018-08658 Filed 4-24-18; 8:45 am]
 BILLING CODE 6717-01-P