Audit Report: DOE-OIG-18-33

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May 24, 2018

The Federal Energy Regulatory Commission’s Natural Gas Certification Process

The Federal Energy Regulatory Commission (FERC) is an independent agency that regulates the Nation’s natural gas industry under authorities granted by the Natural Gas Act of 1938, the Energy Policy Act of 2005 (EPAct 2005), and other statutes.  Established in 1977, FERC approves the construction, operation, and location of natural gas interstate pipelines and facilities by issuing certificates of public convenience and necessity.  The application process for natural gas projects can be complex and involves multiple FERC offices as well as a variety of Federal, state, and local stakeholders.  

Because of significant growth of the natural gas industry, increased public awareness of FERC’s role in the application review process, and heightened controversy over pipeline projects, the public has been more involved in the development and siting of natural gas facilities.  Given the importance and complexity of FERC’s mission for reviewing natural gas applications and issuing certificates of public convenience and necessity, as well as the significance of recent Congressional attention, we initiated this audit to determine whether FERC’s natural gas certification process was performed in accordance with relevant laws, regulations, policies, and procedures, to include timeliness and stakeholder input.

Nothing came to our attention to indicate that FERC had not generally performed the natural gas certification process in accordance with applicable laws, regulations, policies, and procedures, including the Natural Gas Act of 1938 and EPAct 2005.  During our review of the overall certification process and a sample of closed natural gas applications, nothing came to ourattention to indicate that FERC had not performed its due diligence in reviewing and making determinations on natural gas certification applications based on a consideration of the public benefits and adverse impacts of the proposed projects.  In addition, although there were no specific statutory or regulatory deadlines for processing natural gas certification applications, we found that FERC generally adhered to an internally established timeliness performance measure.  Finally, we found that FERC addressed stakeholder concerns by obtaining, considering, and aggregating stakeholder input throughout the natural gas certification process; however, as described in more detail below, FERC lacked sufficient controls to ensure comments were consistently addressed.  

While we did not find any concerns that called into question the appropriateness of decisions FERC made on natural gas certification applications, we identified four areas for improvement that, if addressed, could aid FERC in more efficiently and effectively managing its natural gas certification process: process transparency, public access to FERC records, tracking stakeholder comments, and data integrity.

Topic: Management & Administration