By Jeffrey Karp and Kevin Fink

Among other responsibilities, the Federal Energy Regulatory Commission ("FERC" or "the Commission") approves and issues construction certificates for interstate gas pipelines and related infrastructure under section 7 of the Natural Gas Act ("NGA"). Section 7(c) of the NGA requires that any person seeking to construct or operate a facility for the transportation of natural gas in interstate commerce must obtain a certificate of public convenience and necessity from FERC. FERC’s 1999 Statement of Policy - Certification of New Interstate Natural Gas Pipeline Facilities - outlines the evaluation standard for issuing a certificate of public convenience and necessity. Once a certificate application is filed, the gating question is whether the project can go forward without subsidization by the pipeline’s existing customers. If that threshold requirement is met, FERC determines whether the applicant has sought to eliminate or minimize adverse effects on existing customers, existing pipelines in the market and their customers or landowners and communities affected by the route of the new pipeline. If the proposed project has no adverse effects, the Commission proceeds to a preliminary determination or a final order. However, if there are residual adverse effects - after efforts have been made to minimize them - FERC balances the evidence of public benefits achieved against the residual adverse effects in a economic test, and then proceeds to environmental and other reviews if the benefits outweigh the adverse effects.