An independent energy regulatory agency has backpedaled on its previous decision to invoke environmental regulations for new natural gas projects.
The Federal Regulatory Energy Commission, composed of three Democrats and two Republicans who are Senate-confirmed political appointees, voted unanimously Thursday to designate the rules as draft policy statements, meaning they will not apply to pending project applications.
The move dealt a blow to the Biden administration’s climate change agenda but delivered a major win for critics who argued the green regulations would have deterred new natural gas projects.
Federal courts have repeatedly ordered FERC to consider how natural gas pipeline projects contribute to climate change and impacts on historically disadvantaged communities.
The commission’s Democratic members said the new policy statement is, in part, a response to the courts.
On Capitol Hill, Sen. Joe Manchin, West Virginia Democrat, joined Republicans and industry groups in cheering the move. They said the new rules would have erected unnecessary hurdles for oil and gas companies.
FERC weathered sharp criticism from the energy industry earlier this month after it took steps to create a twofold climate change threshold for approval of new natural gas pipeline and project: cap greenhouse gas emissions and require consideration of other environmental impacts to communities.
Mr. Manchin, who previously blasted the climate regulations as “reckless,” described the updated guidance as a “course correction from their previous partisanship.”
“Energy security for America and our allies is dependent on FERC’s ability to move much-needed energy infrastructure projects forward,” said Mr. Manchin, who chairs the Senate Energy and Natural Resources Committee. “To do so they must maintain clear and predictable policies that strike the right balance between energy security, affordability and environmental considerations.”
Sen. John Barrasso of Wyoming, the ranking Republican of the committee, said FERC’s reversal was an “acknowledgment of the damage these statements would have done if left in place.”
“FERC must go back to the drawing board and start over on these harmful proposals,” he said.
FERC’s Democratic commissioners testified to Mr. Manchin’s committee earlier this month that the climate regulations were needed to survive judicial review after several federal court decisions halted their pipeline certificates for failing to consider enough environmental effects.
FERC Chair Rich Glick, a Democrat, echoed that sentiment in a statement explaining the agency’s recent actions.
“The policy statements were intended to provide a more legally durable framework for the Commission to consider proposed natural gas projects,” Mr. Glick said. “However, in light of concerns that the policy statements created further confusion about the commission’s approach to the siting of natural gas projects, the commission decided it would be helpful to gather additional comments from all interested stakeholders, including suggestions for creating greater certainty, before implementing the new policy statements.”
Neil Chatterjee, a former Republican FERC commissioner and outspoken critic of the environmental regulations, labeled the change as a “complete and total retreat by the commission” that will allow pending projects to get approved. He predicted that FERC will receive a “flood of new applications” before the new statements are finalized.
“The statements are still out there and could have a chilling effect on future investment, but yesterday’s actions — including the approval of three projects under the 1999 approach — were significant,” Mr. Chatterjee said in an email. “It must have been difficult for the commissioners, but it was the right thing to do.”
Industry groups like the American Petroleum Institute, which lobbies for oil and gas companies, were also pleased with FERC’s reversal.
“Hopefully when the commission revises the policy statements it will allow for a clear path forward and an expeditious review of the backlog of vital projects,” said API Vice President of Midstream Policy Robin Rorick.