Senator Manchin's Permitting Reform Bill Could End Debate Over Who Regulates Hydrogen Pipelines
Buried toward the end of the 91-page bill unveiled by Senator Manchin on September 21, 2022, is a small but significant provision amending the Natural Gas Act's (NGA) definition of natural gas to include "hydrogen mixed or unmixed with natural gas." Because of that provision, if enacted, the bill, the Energy Independence and Security Act of 2022, which is intended to speed up the nation's energy infrastructure permitting process, would put to rest a long-standing debate over whether the Federal Energy Regulatory Commission (FERC) has jurisdiction over interstate hydrogen pipelines.
FERC has jurisdiction under the NGA to regulate the transportation and sale of "natural gas," currently defined as "either natural gas unmixed, or any mixture of natural and artificial gas." FERC also has jurisdiction under the Interstate Commerce Act to regulate the transportation of crude oil, refined petroleum products, and natural gas liquids. Because hydrogen does not fit into any of these definitional buckets, FERC has never been able to claim jurisdiction over pure hydrogen pipelines (although Chairman Glick has declared that the FERC would maintain jurisdiction over an interstate natural gas pipeline that blends hydrogen with natural gas on its system). And, although the Pipeline and Hazardous Materials Safety Administration administers safety regulations that are applicable to hydrogen pipelines and the Surface Transportation Board (STB) regulates hydrogen pipeline rates, no federal agency has siting authority over interstate hydrogen pipelines. Until now, perhaps.
Amending the definition of natural gas to include unmixed hydrogen would give FERC the authority under NGA Section 7 to certificate the construction and operation of interstate hydrogen pipelines. It would also give FERC the authority to regulate the rates for the transportation of hydrogen under NGA Sections 4 and 5, thus displacing the rate authority of the STB.
It may seem counterintuitive for Senator Manchin to propose that FERC be given oversight of another domestic energy resource when he has so frequently criticized FERC energy policies in the recent past. The reason, however, likely lies within Section 7(h) of the NGA. This provision gives holders of certificates of public convenience and necessity the right of eminent domain if they cannot otherwise acquire the lands needed to construct interstate natural gas pipelines. There is no such corollary in the Federal Power Act, which is why electric transmission line projects have often faced long permitting delays from numerous state agencies (which is another focus of Senator Manchin's bill). By proposing to put interstate hydrogen pipelines under the NGA umbrella, with the same federal eminent domain authority, Senator Manchin is seeking a more streamlined permitting and construction process for this growing energy resource.
According to the Department of Energy, there are 1,600 miles of hydrogen pipelines operating in the United States. By contrast there are approximately three million miles of natural gas pipelines. Senator Manchin's proposed bill may help close that gap. The text of the bill has been criticized from both sides of the aisle after its release for reasons unrelated to the hydrogen provision, and its outlook for legislative approval is uncertain. However, Senator Manchin supported the Inflation Reduction Act only after reaching an agreement with Senate Majority Leader Chuck Schumer, House Speaker Nancy Pelosi, and President Joe Biden to include his proposed bill in an upcoming continuing resolution that Congress must pass by September 30 or risk a partial government shutdown. If the key players maintain this agreement, then Senator Manchin's legislation will become law shortly and, as a result, FERC will gain jurisdiction over interstate hydrogen pipelines.