Does the Federal Energy Regulatory Commission (FERC) Have Authority To Regulate the Climate?
The Biden administration has pledged to meet what it calls “the accelerating threat of climate change” with a wide-ranging campaign to discourage the production and use of fossil fuels in order to control the emission of carbon dioxide and other greenhouse gases said to be the principal cause of global warming. The White House has directed regulatory agencies and departments across the executive branch to “tackle the climate crisis.” The administration has set a goal to eliminate carbon dioxide emissions from the electric power sector by 2035.
The Federal Energy Regulatory Commission, or FERC, is an independent regulatory agency whose enabling statutes include the Federal Power Act and the Natural Gas Act. FERC’s statutory responsibilities include regulation of the transmission and wholesale sale of electricity in interstate commerce, and authorization of proposals for the construction and operation of interstate natural gas pipelines and storage facilities.
Doing its part to tackle the climate crisis, FERC has proposed a new policy that will greatly expand the scope of the climate-related environmental impact analysis required for proposed natural gas projects. Traditionally, such analysis has been limited to an evaluation of the emissions that would result directly from the construction and operation of the proposed project. Going forward, FERC is proposing that such analysis will also evaluate the emissions that would result indirectly from the upstream production and downstream use of the natural gas to be handled by the proposed project.
In other policy statements having to do with the electric sector, FERC has announced that it will consider proposals from entities it regulates to add into wholesale electricity prices any charges that are levied by state regulators on greenhouse gases emitted by the power plants producing the electricity.
Does FERC have the legal authority to implement these new climate-related policies and, by doing that, dramatically expand the scope of its regulatory activities? J. Kennerly Davis, Jr. and Bernard McNamee joined us for a probing, wide-ranging discussion of the statutes and case law that provide the answer to this vitally important question.