FERC Terminates Draft Policy Statement on Climate Change Impacts of Natural Gas Infrastructure
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Under the direction of Chairman Christie, President Trump's new appointee to lead the agency, the Federal Energy Regulatory Commission (FERC) issued an order revoking the draft policy statement that would have assessed the upstream and downstream greenhouse gas (GHG) emissions and associated climate change impacts of natural gas infrastructure projects.
High-level overview
By revoking its Interim GHG Policy Statement, FERC has signalled that it will not assess certain disclosures of GHG emissions of infrastructure projects. FERC will continue to perform environmental reviews on each natural gas pipeline certificate application under its jurisdiction but will operate on a “case-by-case” basis oriented on the characteristics of each project. The decision follows several years of federal appeals court decisions which have often remanded orders back to FERC due to insufficient consideration of climate change impacts, which served as a driving factor in the agency contemplating updates to its Policy Statement. Operating under a new chairman, FERC is ostensibly aligning with the energy policy agenda—as shown by the Executive Orders issued in the first week—of the second Trump administration.
Procedural history
FERC released the Interim GHG Policy Statement on February 18, 2022,1 pursuant to its authority vested by the National Environmental Policy Act (NEPA) and the Natural Gas Act (NGA). As part of its jurisdiction in determining if proposed natural gas infrastructure satisfied the "public interest" standard in accordance with the NGA, FERC would encourage new—and expanded—disclosures by project applicants with respect to GHG emissions and broader climate change impacts in order to assist its environmental review under NEPA. FERC Policy Statements are not formal regulations or statutes (i.e., legally binding), but rather are guidance materials that typically outline how the agency may contemplate an application and what information it could use in evaluating such applications.
Most notably, the Interim GHG Policy Statement would have compelled project sponsors to provide the following information in natural gas pipeline certificate applications: an estimate of reasonably foreseeable GHG emissions stemming from upstream production and downstream end-use; an explanation (if warranted) as to why upstream and downstream GHG emissions are not quantified; any evidence that impacts the quantification of GHG emissions; and a description, including cost estimates, of potential GHG emissions mitigation measures.
While the Interim GHG Policy Statement alluded to a "substantial likelihood" of downstream GHG emissions from a project, FERC conceded that such impacts may not be feasibly modeled or identified at the time of an application, and that each project would be analyzed on a case-by-case basis. Any proposed natural gas pipeline—or liquefied natural gas facility—exceeding 100,000 metric tons of carbon dioxide emissions annually would have been subject to an Environmental Impact Statement (EIS), a full environmental review undertaken by FERC staff. For a detailed overview of the Interim GHG Policy Statement, please refer to our prior client alert.
Following significant input from stakeholders and intervenors, including many who opposed the scope of the Interim GHG Policy Statement, FERC downgraded the proposal to a "Draft Policy Statement" a month later in March 2022. Pipeline companies and industry participants expressed concern about the threshold triggering an EIS, which may have led to longer application timelines for most NGA certificate applications. Opponents also questioned if the courts would always mandate an EIS rather than an Environmental Assessment (an environmental analysis that is smaller in scope and typically quicker to publish). In his comments accompanying the draft designation, former commissioner James Danly contended that the Interim GHG Policy Statement would have created a de facto policy where the "standard environmental review [of a natural gas infrastructure project] requires preparation of an EIS."2
Ultimately, four commissioners (of the five sitting commissioners), including chairman Christie, concurred with the termination order. In their concurrence, the commissioners indicated that considering GHG emissions—and attendant feasible strategies to reduce them—will remain a key component of the review process for natural gas pipeline certificate applications in the future. The commissioners also cited the record built during this proceeding as a net positive in providing more information as to the balance between its NGA and NEPA obligations and regulatory certainty and clarity afforded to project sponsors and pipeline companies.
Legal context
In recent years, FERC has been directed by federal appellate courts—particularly, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit)—to revise environmental reviews of certain natural gas pipeline certificate applications. The D.C. Circuit has remanded several cases back to FERC, finding that there was typically a shortcoming during the environmental review process under NEPA.
For instance, in a 2017 decision on the Sabal Trail Pipeline, the D.C. Circuit ruled that FERC did not "quantify or consider" the downstream GHG emissions of the project and consequently directed FERC to prepare a new EIS.3 Likewise, in July of 2024, the D.C. Circuit sided with petitioners claiming that FERC had violated NEPA and the NGA by "failing to assess [the] significance of GHG emissions" in an interstate natural gas pipeline application.4 However, the D.C. Circuit also found that FERC had complied with NEPA by not reaching a conclusion with respect to downstream ozone impacts, citing a lack of information in the record of the proceeding (i.e., as furnished by the applicant or able to be evaluated in the EIS by FERC staff).
Accordingly, FERC sought to align its policies with the (increasingly frequent) outcome stemming from the courts, where it was more common than not to be required to conduct a more thorough environmental review.
It is important to note that the Interim GHG Policy Statement was never formally applied to any pending (or new) natural gas pipeline certificate application subject to FERC's jurisdiction. The originating docket continued to receive comments from stakeholders, as well as elected officials, without FERC moving to issue a final Policy Statement.5
Future outlook
Going forward, FERC will continue to conduct environmental reviews on a case-by-case basis by estimating the foreseeable GHG emissions from natural gas projects. Additional layers of environmental analysis focused on climate change—such as the Social Cost of Carbon—are being reduced or phased out, however.
In an Executive Order issued during his first week in office, President Trump eliminated the documents and memoranda issued by the Interagency Working Group (IWG) on the Social Cost of Greenhouse Gases.6 The Social Cost of Carbon is an administrative, cost-oriented tool that attaches a dollar amount to one metric ton of carbon dioxide emissions, framed in terms of potential negative effects to communities. However, prior D.C. Circuit decisions on LNG pipeline applications have found that the Social Cost of Carbon was not developed on a project-level basis, and that it did not purport to extrapolate project-level emissions to broader environmental impacts such as global climate change. As such, in light of the Executive Order, FERC will not be able to incorporate any estimate of the Social Cost of Carbon pursuant to its authority under NEPA.
FERC may also operate under more limited NEPA obligations in the near future, stemming from the same Executive Order. While NEPA has been a topic of contention, either perceived as constraining resource development and permitting decisions or as a means to bolster conservation, the Trump administration instructed the Council on Environmental Quality to advise on existing NEPA guidance. Specifically, the Executive Order seeks to "provide greater certainty in the Federal permitting process, including, but not limited to, streamlining the judicial review of the application of NEPA." It stands for the proposition that natural gas certificate applications before FERC will be evaluated on an economic basis (i.e., the "public interest" under the NGA) with less emphasis on potential knock-on effects of GHG emissions and environmental impacts.
1 Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews, 178 FERC ¶ 61,108 (2022) (Interim GHG Policy Statement).
2 Order on Draft Policy Statements, 178 FERC ¶ 61,197 (2022) at pg. 6.
3 Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017).
4 N.J. Conservation Found. v. FERC, 111 F.4th 42, 54 (D.C. Cir. 2024)
5 Policy Statement on Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews, FERC Docket No. PL21-3-000.
6 Unleashing American Energy, Executive Order (Jan. 20, 2025).
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