FERC issued a final rule Oct. 7 that removes regulations that paused natural gas pipeline and LNG export facility construction pending appeals in order to encourage the development of plentiful gas at reasonable prices (RM25-9).
The rule reverses Order 871, which stopped the issuance of authorizations to proceed with construction of pipelines and LNG export facilities while rehearing requests were filed in opposition to project construction, operation or need. The order also adopted a policy of presumptively staying projects when a landowner affected by eminent domain protested a project.
FERC cited President Donald Trump’s executive orders seeking to “unleash” U.S. energy and prioritizing the construction of energy infrastructure. (See What is and isn’t in Trump’s National Energy Emergency Order.)
In April, the pipeline trade group Interstate Natural Gas Association of America filed a petition for rulemaking seeking to rescind Order 871, arguing a decision from the D.C. Circuit Court of Appeals affords stakeholders the same protections. The court allowed affected landowners and others to file an injunction halting construction as soon as 30 days after a rehearing request has been filed at FERC.
INGAA also argued the order effectively presumed FERC’s approvals of pipeline are wrong, which subjects developers to unnecessary costs and construction delays. Most of the requests under Order 871 came from parties that do not own land, INGAA said, arguing it had become a tool to delay authorized projects.
FERC issued a proposal to eliminate the order and its rules pausing construction in June, saying more gas pipelines are needed to meet increasing demand for the fuel from end users and power plants, and that pipeline expansion would make both the gas and bulk power systems more reliable.
Opponents included major environmental organizations, who argued that the court decision allowing for quicker injunctions still could let developers start construction on land seized by eminent domain before a stay from the courts was issued. FERC said that those concerns are addressed by existing landowner protections.
“The commission will continue to consider stay requests from landowners on a case-by-case basis, as well as continue the presumptive stay policy established in Order No. 871-B,” FERC said in the final rule. “The presumptive stay policy specifically protects directly affected landowners who would be subject to eminent domain.”
INGAA argued that the change was needed to help meet demand growth in the electricity sector, with FERC summarizing that “additional generation capacity is critical to the nation’s energy security needs, particularly given the development of data centers to advance artificial intelligence.”
Opponents acknowledged that demand is growing, but there is a lot of uncertainty in forecasted data center demand, and much of it will be met by renewable generation.
But FERC said the rule around staying construction was procedural, only delaying projects it found to be in the public interest. “Despite comments suggesting the contrary, it is not the mechanism by which the commission determines whether there is a need for additional energy infrastructure,” FERC said. “The commission continues to evaluate proposed projects under the existing standards in [Natural Gas Act] Sections 3 and 7, as appropriate.”
Even if natural gas generation will decrease over the long term, as some reports indicate, the power grid and natural gas system will continue to be interdependent.
“Even though more renewable energy resources, such as wind and solar, are supplying electric generation, the electric power sector has relied on natural gas over the past decades and continues to do so, which leads to increased interdependence,” FERC said. “Accordingly, an increase in electricity demand, without sufficient natural gas supplies and interstate transportation infrastructure to support such demand, could impact grid reliability even if renewable energy source generation increases.”
Opponents also questioned the value of relying on Trump’s executive orders, which independent agencies are not required to follow. But FERC said that those orders were not the primary basis for its decision. It instead relied on its authority under the NGA and considered the added costs and risks a delay of up to 150 days could cause a project it had previously found to be in the public interest.
“The commission did not rely on compliance with executive policy to justify the regulation’s removal; rather it discussed the executive orders as evidence that the pressing resource adequacy and system reliability concerns have been widely recognized,” FERC said.
