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On February 18, 2021, the Federal Energy Regulatory Commission (“FERC”) published a Notice of Inquiry (“NOI”) seeking comment on revisions to FERC’s policy statement on the certification of new interstate natural gas facilities (“Certificate Policy Statement”). Niskanen and affected landowners provided comments in response to the NOI. If FERC adopted these proposed changes in a binding order or rulemaking, it would dramatically improve—among other things—landowners’ rights and FERC’s analysis of proposed pipeline projects.

FERC’s Policy Statement was last updated in 1999, and consequently in dire need of revision. There has been a massive shift in market supply and demand for natural gas in the last two decades, including an oversupply of gas that will continue for decades to come. With this in mind, Niskanen noted that it is currently (and indisputably) FERC’s practice when considering a proposed pipeline project to: (1) rely exclusively on precedent agreements, almost all of which are with affiliates; (2) use those affiliate agreements as the excuse for ignoring any evidence – no matter how credible – from project opponents that shows a lack of need; (3) ignore adverse impacts on landowners and instead analyze the meaningless metric of “adverse impacts avoided”; (4) accept anything the applicant does as evidence of avoided impacts, including merely talking to people; (5) balance the public need for the project against adverse impacts via a 1-sentence “economic test” that does not quantify either the benefits or the adverse impacts; and (6) approve the project.

Niskanen strongly recommended  that FERC at a minimum should (1) look behind affiliate precedent agreements whenever credible evidence is presented that those agreements do not represent actual market demand; (2) acknowledge that landowners compelled to sell their property under threat of eminent domain are as adversely affected as landowners who refuse to ‘voluntarily’ sign easement agreements; (3) if it maintains the fiction that the balancing of the project’s public benefits against its adverse impacts is an “economic test”, actually determine the quantified impacts on landowners; and (4) explain how it assigned quantified values to each of those factors.

Niskanen also recommended that FERC should adequately address and protect landowner interests, including that: FERC’s current communication with and notice to landowners regarding pipeline proceedings is broken and needs fixing; that FERC should define what construction activities are allowed  while pipelines’ await all required authorizations; that FERC should stay eminent domain until FERC’s administrative process is concluded; and FERC should help ensure that pipeline applicants are accountable for certificate violations.

Niskanen anticipates that if these recommendations are incorporated into a revised Certificate Policy Statement, they will go a long way to ensure a more robust, fair, and transparent process for landowners, consumers, and industry.

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