Federal Agency Charts New Course on Environmental Justice and Climate

FERC moves to reform its decision-making, despite criticism from fossil fuel companies

By Juliet Grable

March 10, 2022


Activists rally with the People vs. Fossil Fuels demonstration to call for President Biden to stop approving fossil fuel projects. | Photo by Tom Williams/CQ Roll Call via AP Photos

The federal agency tasked with overseeing the transmission of electricity, oil, and gas across the United States is—finally—adopting new policies that require it to incorporate environmental justice and climate change in its decisions on new fossil fuel projects. Not surprising, the fossil fuel industry and its backers in Washington are unhappy about the new guidance. The tug-of-war over something as seemingly arcane as pipeline regulations could play a decisive role in determining the country’s energy future. 

In mid-February, the Federal Energy Regulatory Commission (or FERC) approved an updated Policy Statement on new methane gas pipelines and an Interim Greenhouse Gas Emissions Policy outlining how it will calculate the greenhouse gas emissions impacts of new fossil fuel projects. At the February 17 hearing, Commissioner Alison Clements argued that the guidance restores balance to a process that has long favored oil and gas companies. Environmental organizations hailed the new policies as a major milestone. The Sierra Club called it “an important step toward a fairer system.” 

FERC’s two Republican commissioners dissented, as did the fossil fuel industry and its most stalwart political allies. On March 4, senators grilled members of the commission on the policies.

Several senators on the Energy and Natural Resources Committee accused the three Democratic commissioners of overreach. Senator John Barrasso, a Wyoming Republican, warned that the new policies pose an unacceptable risk to the electric grid and will cause energy prices to spike. “People are going to have to decide whether to heat or to eat,” he said.

And while most of the Democratic senators on the committee defended FERC’s new reform agenda, committee chair Senator Joe Manchin—the West Virginia Democrat who has made a fortune in the coal industry—called the new guidance a “short-sighted attack on fossil fuel resources” that “elevates environmental considerations above American energy reliability, security, and independence.” 

In an opening statement, FERC commissioner Alison Clements sought to defend and explain the new rules. “I believe that strengthening the commission’s framework for the review of interstate gas pipeline applications will enhance energy security, reliability, and affordability while minimizing adverse impacts on the environment, landowners, and communities,” she said.

Pipelines, power plants, and other fossil fuel infrastructure are disproportionately located in low-income and minority communities. For decades, FERC has rubber-stamped projects while ignoring their contributions to climate change and negative impacts on the environment and people. 

After the fracking boom unlocked huge volumes of domestic methane gas, the pace of new pipelines and liquefied natural gas (LNG) terminals ramped up. So did efforts to fight them. Bitter battles, from Oregon to Appalachia to the Gulf Coast, put a spotlight on the obscure regulatory agency and led to calls for its reform. 

Environmental groups have spent years trying to get FERC to consider how fossil fuel projects contribute to climate change. In several cases, the courts have agreed. Last August, a federal judge ordered FERC to redo its analysis on two LNG terminals on the Texas Gulf Coast to include how they will impact the climate and environmental justice communities. That case had been brought by the Sierra Club on behalf of local community groups. 

“For decades, FERC has rubber-stamped projects while ignoring their contributions to climate change and negative impacts on the environment and people.”

As grassroots efforts against fossil fuel infrastructure increased, lawsuits against FERC attacked how the agency evaluates “project need.” While the Natural Gas Act calls for a balanced approach that considers many factors, FERC has increasingly narrowed its scope to consider only contracts between pipeline developers and prospective shippers of gas. 

“FERC’s complete dependence on [these] precedent agreements made the reviews a fait accompli,” says Gillian Giannetti, senior attorney at Natural Resources Defense Council. “All other impacts did not ever seem to play a factor.” In some cases, the developers and shippers were part of the same company, making the case for “need” even more dubious.

In 2017, then-chairman Kevin McIntyre initiated a process to update FERC’s guidance on new natural gas pipelines. After McIntyre’s untimely death in late 2018, the process stalled until Chairman Richard Glick revived it last year. The two public comment periods yielded 38,000 comments from a variety of stakeholders.

Under the new rules, the agency will consider a broader definition of need, and it must balance that need with “all factors bearing on the public interest,” including impacts on the environment, landowners, and public health. FERC’s new interim policy on greenhouse gas emissions directs FERC to calculate the CO2 emitted directly from plants and pipelines, and in some cases to also consider “upstream” and “downstream” emissions.

Tyson Slocum, director of Public Citizen’s Energy & Climate Program and a longtime advocate for FERC reform, calls the updated pipeline policy a “prudent, measured approach to updating the public interest standard for pipelines.”

Critics, however, say the new GHG emissions policy allows FERC to “regulate” CO2 emissions. It doesn’t. The policy sets a threshold: If a project is calculated to emit above a certain level of greenhouse gases per year, it triggers an environmental impact statement. But, as Clements pointed out in the hearing, there’s nothing in the new policy that says a high-emitting project will be blocked. Instead, the policy calls for balancing a project’s emissions impact with mitigation measures.

At the March 4 hearing, Glick argued the commission is only doing what the courts have ordered, and that the guidance will help avoid litigation that has stalled so many projects of late. “I think developers of energy infrastructure would agree that when regulatory agencies ignore judicial directives or cut corners, the courts typically vacate the permits and send the agencies back to the drawing board,” Glick said.

To this end, FERC has hired Montina Cole as its first-ever senior counsel for environmental justice and equity to help agency staff write its environmental justice reviews—a task that will require looking at the distinctive traits of each affected community. For example, census tracts may be a good way to identify the demographics of a community in a densely populated city, but they are not an ideal tool for rural regions.

“Montina cares deeply about environmental justice and equity issues, and she’s exceptionally qualified in that area,” says Giannetti, who worked with Cole when she was at NRDC. “She’s also a really good educator.” 

FERC is also building out its Office of Public Participation so that affected community members can take part in the agency’s notoriously complex process. The agency’s decisions directly affect people’s lives, public health, and private property. Yet often residents in communities located near fossil fuel infrastructure are the least prepared to participate. Even the first step—formally petitioning to become an intervenor—is a barrier for many. Historically, FERC hasn’t provided information in languages other than English.

“FERC has never really put an emphasis on prioritizing public assistance to helping people navigate its very complex system,” Slocum says. “This is new.”

The commission will have to make special rules to carry out the task of assisting the public, Slocum says. For example, advocates are calling for the creation of an “intervenor compensation fund,” possibly modeled after an existing program in California, to help stakeholders pay for legal representation.

“The clock is ticking,” says Slocum, adding that the commission should act swiftly to make permanent the policies that address environmental justice and climate change. Under the leadership of Chairman Glick, FERC has a 3–2 Democratic advantage for the first time since 2017, and Slocum predicts a “flurry of rulemaking” over the next several months. 

Meanwhile, fossil fuel allies are using the war in Ukraine to attack President Biden’s climate policies and justify ramping up production at home. At the March 4 hearing, Senator Manchin called Russia’s invasion an “energy war” and criticized the new policies as a short-sighted attack on much-needed domestic fossil fuel resources.

“To deny or put up barriers to natural gas projects and the benefits they provide while Putin is actively and effectively using energy as an economic and political weapon against our allies is just beyond the pale,” he added.

Twenty-five Republican governors have called on President Biden to boost domestic production, in part by “reinstating regulatory reforms to streamline energy permitting.” 

If Congress changes hands during the midterm elections, legislative attacks on FERC reforms will likely increase. 

As Giannetti points out, when pressure to build more fossil fuel projects is high, all too often environmental justice takes a back seat. “Whether a project is environmentally just or not does not change based on who is in power, or on political whims,” she said.