Powelson Leaves and LaFleur Blooms - FERC Policy and Projects Stalled?

Commissioner Powelson has announced that he will leave FERC in "mid-August." This will leave FERC with four commissioners, two Republicans and two Democrats, which is certainly enough to continue with business. However, anyone who has been watching FERC knows that Commissioner Glick has been dissenting on a number of key issues and that Commissioner LaFleur has occasionally joined him, but has also been willing to join the majority. Until such time as President Trump can nominate and confirm a replacement for Commissioner Powelson, which we would not expect to occur before the end of the year, Commissioner LaFleur will be in the strongest position she has probably enjoyed in her eight-year tenure on the Commission.

Those looking to get a pipeline certificate would be well advised to pay attention to her vote, including her view that the Commission has changed its "policy on disclosure and consideration of downstream and upstream greenhouse gases (GHG) emissions." With regard to FERC's review of its Certificate Policy Statement, given a likely 2-2 vote on many of the thorniest issues presented by any revision to the current policy and the 1500-plus comments filed by a range of stakeholders, it seems highly unlikely that the Commission will move forward anytime soon.

Who Needs LaFleur's Vote?

Commissioner LaFleur's influence is probably best demonstrated by the flurry of data requests in the past two weeks that FERC sent to nearly every project currently awaiting a FERC certificate, and her separate statements issued with regard to rehearing requests filed with respect to Millennium Pipeline's Eastern System Upgrade project, and Enbridge's NEXUS project.

Between July 12 and July 17, FERC issued data requests to the sponsors of thirteen projects (almost every pipeline project currently pending before FERC), which asked the pipelines to provide "what the ultimate end-use of gas" will be for the project's customers, if known. The majority of these projects had requested approval of their certificates by the end of this year. That outcome, however, may depend on their ability to win the vote of Commissioner LaFleur, which will likely hinge on her view of their responses.

Where Does LaFleur Stand?

In her separate statement concerning the Eastern System Upgrade project, Commissioner LaFleur made the following key points:

She fundamentally disagrees with the Commission's change of "policy on disclosure and consideration of downstream and upstream greenhouse gases (GHG) emissions."
She believes FERC has a duty to seek more information in the record regarding the identified end uses.
FERC should assess the significance of the GHG emissions by comparing them to the total state, regional, and/or national emission inventories.
FERC should adopt the Social Cost of Carbon as a metric to determine how a project's contribution to GHG emissions would translate into physical effects on the environment.
Despite her ongoing disagreement with the Commission's GHG approach, she continues to address each case based on the facts in the record and the governing law as she reads it.

Most of the pipelines that received the data request have responded, with most of the responses being very short and simply providing the intended use or stating that the pipeline did not know the ultimate end-use of the pipeline's gas. Perhaps understanding the importance of swaying Commissioner LaFleur, Dominion Energy went a little further in its response for its Sweden Valley Project and described how its project addresses four key indicators of need under the current Certificate Policy Statement.

The data request and the responses filed only address Commissioner LaFleur's second concern (i.e., FERC has a duty to seek more information in the record regarding the identified end uses). Now that she has clearly articulated her remaining concerns, it will be interesting to see if any of the pipelines supplement their answers to address her third and fourth concerns by providing information about the significance of the GHG impact and a calculation of the Social Cost of Carbon. While FERC has chosen to not require this information, there is no reason a pipeline couldn't provide it, especially if it believes it can help sway Commissioner LaFleur to vote for a project. In the meantime, these projects are unlikely to be approved unless Commissioner LaFleur decides to approve them.

FERC's Review of its Certificate Policy Statement is Likely Adrift

In April, FERC issued a Notice of Inquiry with respect to its 1999 Certificate Policy Statement as we reported in Development or Disruption? FERC Begins Review of Project Approval Process. The comment period was extended once and expired this Wednesday, by which time there had been over fifteen hundred comments filed. As Commissioner LaFleur's separate statements make clear, she is not in agreement with FERC's approach on GHGs. There will also likely be other issues where she and Commissioner Glick disagree with the views of Chairman McIntyre and Commissioner Chatterjee. Therefore, although the comment period is now over, the likelihood that there will be any changes to the Policy Statement seems remote until Chairman McIntyre can get a third vote.

Since 2000, it has taken FERC nominees an average of 125 days to move from nomination to confirmation, with the shortest time period being 25 days and the longest being 302 days (see the chart below). Therefore, while FERC Staff can begin to summarize the various positions expressed in the comments, we don't expect there to be any Commission-level activity until Commissioner Powelson's replacement can be confirmed, which will not likely occur until 2019.

Historical Review of Times for Confirmation of FERC Commissioners

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Overview of comments received on FERC's review of Certificate Policy Statement

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