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Energy and Environment Monitor

Outgoing FERC Commissioner Urges Commission to Broaden Analysis of Need for and Effect of Pipelines: Effect May Be to Increase Direct Action by Pipeline Opponents

February 8, 2017

By: Robert G. McLusky

Norman Bay’s tenure as Chairman and a member of the Federal Energy Regulatory Commission ended with his resignation effective February 3. He resigned after President Trump appointed another member of FERC to serve as chairman. The resignation leaves the Commission, which is authorized to have 5 members, with only 2 members; one short of a quorum.

In one of Bays’ last acts, he voted with the other 2 commissioners to approve a certification for the Empire Pipeline through New York and Pennsylvania, but used that opportunity to urge FERC in the future to examine the broader impacts of gas production facilitated by pipeline construction. His separate remarks appear in the last 5 pages of the FERC decision. He started with a statement that “while FERC does not regulate the production of natural gas, methane emissions, or the use of fracking” there is considerable public concern with the impacts of the gas industry. Likewise, he noted that property owners have a unique interest because a FERC certificate carries with it the right to invoke eminent domain. In light of the considerations, he offered two suggestions to his fellow commissioners.

First, he urged the Commission to revamp the way that it evaluates the “need” for the project under the Natural Gas Act. He noted that a 1999 FERC policy identified multiple factors in assessing public benefits and need, but that in practice FERC has relied largely on signed agreements by shippers to use the pipeline. He suggests that this practice might not consider whether the capacity is needed to ensure reliable delivery to new or existing electric generating units; whether the agreements are signed by affiliates of the certificate applicant; and whether the markets to be served by the pipeline are likely to materialize. Here, he noted that historically gas has flowed from the southwest to the northeast to serve established and stable markets—patterns which are changing as the Marcellus and Utica shale regions start to export gas. 

Second, he urged commissioners to broaden the environmental review it does to include “upstream” impacts. He acknowledged that prevailing precedent does not require FERC to examine the impacts of gas production under NEPA because FERC does not control it, but nonetheless observed that the environmental consequences of both existing and anticipated increased production in the Marcellus and Utica fields is worthy of further study by the Commission.

In 2016, protestors appeared outside the homes of Bays and other FERC Commissioners telling their neighbors that the commissioners were destroying communities and the climate. Bays’ recent statement will do little to curtail that type of direct action in the future. 

This article was authored by Robert G. McLusky, Jackson Kelly PLLC.


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