May 2022, Vol. 249, No. 5


Russia Concerns Loom Over FERC and EPA Anti-Pipeline Efforts

By Stephen Barlas, Contributing Editor, Washington, D.C.

Pipeline companies had already been pressuring the Federal Energy Regulatory Commission (FERC) prior to the Russian invasion of Ukraine to rethink its two new policy statements on greenhouse gas (GHG) emissions and pipeline certificates. But any future FERC reckoning with new supply-need realities in the wake of Russia’s invasion of Ukraine could be more imagined than real. 

On March 24, the day before Biden made his European liquefied natural gas (LNG) commitment, the Commission announced that it was reclassifying its two February policy statements as “drafts” and taking public comments on them.  

FERC announced in February the GHG policy was “interim” and asked for comments on it at that time. So, the March 24 statement calling these policies “drafts” wasn’t much of a concession; more likely, it is a distinction without a difference given environmentalists’ hold over the Biden administration. 

Moreover, the top federal appeals court in Washington, D.C., and the Environmental Protection Agency (EPA) are exerting counter-pressure aimed at stiffing the spines of the three Democratic FERC commissioners who voted for the now “draft” GHG policy. It requires  the commission to quantify and consider more GHG impacts on climate change for both LNG and pipeline projects when determining, as it must under the Natural Gas Act, whether a project is “in the public interest.” 

In an example of the avalanche of pipeline industry pleas arriving at FERC in March, Boardwalk Partners argued that FERC does not have the authority to consider upstream and downstream GHG emissions – sometimes referred to as “indirect” emissions – when considering a new pipeline project. 

Those emissions are not created by the pipeline, and it has no responsibility for them. Instead, it is EPA that has the authority under the Clean Air Act to regulate methane emissions, not FERC under the Natural Gas Act. 

Boardwalk argued: “… they violate the APA by imposing new regulations or amending existing regulations without the foundation of notice-and-comment rulemaking procedures; they fail to reflect reasoned agency decision-making as required under the APA; and they exceed the Commission’s statutory authority under the NGA and NEPA.”  

APA is the Administrative Procedure Act; NEPA stands for the National Environmental Policy Act; and NGA is the National Gas Act. 

It may be that the FERC Democratic majority won’t have much wiggle room in the wake of the latest decision by the U.S. Court of Appeals for the District of Columbia. That court has issued a series of decisions over the past few years admonishing FERC for failing to adequately consider GHG emissions when granting pipeline certificates.  

In its March 11 decision in Food & Water Watch and Berkshire Environmental Action Team v. FERC, the court chastised FERC for its explanation in its environmental impact statement (EIS) on a Tennessee Gas project, saying that the downstream gas consumption and related GHG emissions were not reasonably foreseeable when it approved Tennessee’s application to construct a 2.1-mile (3.4-kilometer) natural gas pipeline and replace two less-efficient compressor units with one new compressor in Agawam, Massachusetts.  

The court based its decision on the “foreseeability” of GHG emissions, which is a somewhat murky threshold. The court remanded the case back to FERC but did not throw out the certificate. The project has already been completed.  

Katherine Hill, spokeswoman for Kinder Morgan, the parent of Tennessee Gas, declined to comment on the court decision. 

Adam Carlesco, staff attorney, Food & Water Watch (FWW), said, “The D.C. Circuit’s decision in FWW v. FERC will have a ripple effect on FERC’s policies, and its holding justifies many of the Commission’s initial proposals in its interim GHG policy, underscoring that FERC must consider reasonably foreseeable indirect emissions of the projects it regulates.  

“While EPA does have authority to dictate permissible emissions levels from specific regulated facilities, FERC must consider the significance of a project’s emissions at those EPA-permitted facilities in determining whether a project is truly in the public interest under Section 7 of the Natural Gas Act.” 

EPA has also pressed FERC to give more weight to GHG emissions, most recently regarding a Spire Energy gas storage project in Wyoming, for which FERC issued a final EIS on March 15.  

After FERC issued a draft EIS for the Clear Creek Expansion Project in 2021, the EPA wrote the draft EIS did not: “…contain sufficient information to disclose the estimated climate damages from the proposed actions direct and indirect greenhouse gas emissions and is inadequate to meet the purposes of NEPA.”   

But, in its final EIS, FERC stated it applied what was then the interim GHG policy to the project and found those emissions “would fall below the Commission’s presumptive significance threshold; we note this is not based on 100 percent utilization.” So, it rejected the EPA’s concerns. 

The controversy over FERC’s draft GHG policy now casts a much brighter light on EPA’s proposed rule seeking to stiffen requirements on pipeline control of methane emissions.  

The Biden EPA canceled a Trump final rule exempting transmission pipelines from methane restrictions under the Clean Air Act. But in late 2021, the EPA proposed a rule reinstating those Obama-era restrictions and toughen them, much to the dismay of pipelines.  

Michael Pitta, vice president at Kinder Morgan, told the EPA, “Given the scope of Kinder Morgan’s operations, the proposed NSPS [new source performance standards] Rule would directly and significantly impact the company, and could impact the end users that the company serves.”  

Transportation pipelines have, of course, been working on their own methane reductions voluntarily. In response to the EPA’s multifaceted, detailed and technical proposal, the Interstate Natural Gas Association of America (INGAA) said, “INGAA’s members support clear and reasonable federal regulation of methane emissions and have been taking steps to reduce their methane emissions.” 

But INGAA and individual pipeline companies are pressing the EPA to make a number of changes in the proposed rule. One is to retain a functionality exemption for gas-driven pneumatic controllers for safety and reliability reasons.  

They oppose the EPA’s proposed standard for wet seal compressors because the emission limits are based on a best system of emissions reduction (BSER) analysis that overstates emissions, say the pipelines.  

EPA is also proposing requirements that have the effect of making optical gas imaging (OGI) nearly infeasible without any additional environmental benefit, according to INGAA. The EPA is considering restricting emissions from pigging operations, too, although there is no proposal yet.  

The proposed rule is formally called “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review.” 

It contains three separate proposed subparts affecting: (1) new, modified and reconstructed sources that commence construction after Sept. 18, 2015; (2) new, modified and reconstructed sources that commence construction after November 15, 2021; and (3) existing sources that commenced construction on or before Nov. 15, 2021. 

The new wet seal compressor emission reduction standard is a particular flash point. Specifically, EPA is proposing emissions guidelines for state implementation that would apply a 95% volatile organic compound (VOC) and methane reduction requirement from centrifugal wet seals to all existing sources as of Nov. 15, 2021. 

To meet the 95% emissions reduction, EPA anticipates that operators will either (1) capture and route the emissions using a cover and closed vent system to a control device or (2) route the captured emissions to a process.  

Kinder Morgan’s Pitta said the 95% reduction standard is “unworkable and untethered from real-world application of such controls… and has significant negative consequences.”  

In pushing for EPA to enact even stronger methane standards for compressors, pneumatic controllers and other equipment, a number of prominent environmental groups, in their comments, stated: “EPA should further strengthen the wet seal compressor standards by prioritizing control methods that route captured gas to a process, rather than a completion device, and should set standards to reduce emissions from dry seal compressors.”

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