FERC: NATURAL GAS PIPELINES

Mission/Overview

FERC permits, sites, and authorizes the construction and operation of inter- state natural gas pipelines.121 It also regulates the rates for the shipping of natural gas122 (but not the price of the natural gas commodity, which is market based). FERC is charged with ensuring that natural gas pipelines are approved if they are required by the “public convenience and necessity.”123 Pipeline permitting is sub- ject to environmental reviews under NEPA, and the rate for the pipeline and the shipping of the commodity is set by FERC under a just and reasonable standard. Once FERC approves a project, the holder of the certificate has the sovereign’s power of eminent domain.

Needed Reforms

Natural gas pipelines are vital for the economy, manufacturing, heating, and electric generation. Opposition from “Keep it in the ground” environmentalists has made it harder to gain approvals for natural gas pipelines. Under Democrat leadership, FERC has proposed official policies to consider upstream and down- stream GHG emissions from the use of the natural gas that would be shipped in the pipeline to be part of FERC’s public-interest determination when deciding whether to approve a pipeline. There is conflicting direction from the D.C. Circuit on the GHG issue, which also could be seen as a “major questions” issue under the U.S. Supreme Court’s West Virginia v. EPA decision.124

New Policies

FERC should:

Recommit itself to the NGA’s purpose of providing the American people with access to affordable and reliable natural gas. Limit its NGA decision-making on natural gas pipeline certificates to the question of whether there is a need for the natural gas. Limit its NEPA analysis to the impacts of the actual pipeline itself, not indirect upstream and downstream effects.

In addition, Congress, the states, and FERC should consider how better to pro- tect and compensate property owners whose property is taken for the benefit of the public. FERC also needs to be mindful that natural gas pipelines and projects are important for domestic access to natural gas, including local natural gas utilities, natural gas–fired electric generation, and manufacturing, as well as for exports of liquefied natural gas.

FERC: LNG EXPORT FACILITIES

Mission/Overview

FERC permits, sites, and authorizes the construction and operation of LNG export facilities.125 It does not authorize the export of natural gas; DOE exercises that authority. LNG export facilities are important for delivering natural gas to markets around the world and have become an important policy tool in limiting the ability of Russia and Middle Eastern countries to use energy as a tool in for- eign affairs.

Needed Reforms

LNG exports are opposed by climate activists. In addition, some domestic man- ufacturers argue that LNG exports decrease available U.S. supplies of natural gas and increase the domestic price, thereby harming the competitive advantages of U.S. manufacturers in world markets.

Currently, most LNG export facilities are along the Gulf of Mexico in Texas and Louisiana.126 Attempts to build facilities on the west coast (Jordan Cove LNG127) and the east coast have not moved forward for a variety of reasons; delays and costs of litigation can cause developers to cancel projects. An Alaska facility was approved by FERC in 2020, and the Biden Administration has indicated its sup- port.128 An east coast facility in Pennsylvania (or nearby) would unlock Marcellus shale natural gas for export.

FERC is considering policy statements that would consider GHG emissions as part of its NEPA review and its NGA determination as to whether approval of an LNG export facility is consistent with the public interest.

New Policies

Since Congress through the NGA has already determined that LNG exports to countries with free trade agreements are in the public interest,129 and because LNG exports help to ensure America’s ability to support our friends and allies around the world while also supporting domestic natural gas production, FERC:

Should not use environmental issues like climate change as a reason to stop LNG projects.

Should ensure that the natural gas pipelines that are needed deliver more of the product to market, both for domestic use and export, and are reviewed, developed and constructed in a timely manner.

NUCLEAR REGULATORY COMMISSION

Mission/Overview

The Energy Reorganization Act of 1974130 created the Nuclear Regulatory Com- mission (NRC). Before then, the commercial nuclear industry was regulated by the Atomic Energy Commission (AEC), which was established by the 1954 Atomic Energy Act.131 Importantly, the AEC was responsible for encouraging and regulat- ing commercial nuclear power. Broad criticism of this dual function was a major factor in the establishment of the NRC, which held regulatory authority while the newly established Department of Energy held the advocacy function. Today, the NRC is responsible for a broad range of regulatory activities, including reactor safety, oversight of nuclear materials, and protection against radiation as well as permitting new reactors, certifying new reactor designs, and regulating nuclear waste management activities.

Needed Reforms

In 1989, the NRC established alternative licensing processes that were meant to provide a more predictable and efficient regulatory pathway for new Light Water Reactors (LWRs) by combining construction and operating nuclear power plant licenses, allowing for Early Site Permits, and establishing a framework for pre- approval of reactor designs. More recently, the Nuclear Energy Innovation and Modernization Act directed the NRC to establish a technology-neutral licensing process for new, advanced reactor technologies.132 Despite these efforts, the NRC remains a significant cost and regulatory barrier to new nuclear power. Especially frustrating is that these costs to a large extent are due to the agencies being overly prescriptive rather than outcomes-focused and fall on well-known and understood LWR reactor technologies.

New Policies

While refocusing its regulatory efforts on new reactor technologies, the NRC should also continue to ensure the security of radiological sources and mitigate cybersecurity risks across the industry. Applications for Combined Operating Licenses (COLs) and design certifications that rely on light-water technology should generally be completed within two years. Early Site Permits should gener- ally be issued within one year for construction on or adjacent to an existing reactor site. Additionally, the NRC should:

Set clear radiation exposure and protection standards by eliminating ALARA (“as low as reasonably achievable”) as a regulatory principle and setting clear standards according to radiological risk and dose rather than arbitrary objectives.

Work with Congress to reform its funding approach so that licensee fees are generally required for activities that are specific to a regulated entity, with other agency costs being provided through normal appropriations.

Budget

In FY 2022, the NRC was required to recover approximately 85 percent of its $887.7 million budget through licensee fees.133 The Nuclear Energy Innovation and Modernization Act requires the NRC to recover nearly all of its costs through fees. These reforms would likely not cost additional money but could rebalance the fee-versus-appropriations calculation.

Expedite the review and approval of license extensions of existing reactors, which will require the NRC to streamline and focus its NEPA review process.