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In the December 2025 issue of Climate and Energy, NERA Senior Managing Director Jeff D. Makholm explores the 1999 Certificate Policy Statement on interstate natural gas pipelines.
On 12 September 2025, the Federal Energy Regulatory Commission (FERC) terminated a Notice of Inquiry that it had opened in 2018 regarding interstate natural gas pipelines—a momentous action by the agency. The FERC left standing its extraordinary 1999 Certificate Policy Statement, which capped two decades of hard work for the entire US natural gas industry. It illustrates how readily such effectiveness can be undone when those seeking to expand regulatory powers blur longstanding legislative limits in the pursuit of new public policies.
In that 1999 Certificate Policy Statement, the FERC explained how it would evaluate and approve the entry of new competitive interstate pipelines. Dr. Makholm's contributions in the 1990s to Climate and Energy (formerly Natural Gas) documented the key FERC contests between those interstate pipelines and assembled groups of state-regulated natural gas distribution companies, groups Dr. Makholm represented in many FERC proceedings. The FERC's 1999 Certificate Policy Statement amended the errors of its 1995 effort. Dr. Makholm notes that it introduced a highly competitive interstate natural gas transport industry. The FERC's work in the natural gas industry afterward became much less burdensome and litigious.
Dr. Makholm explains that US natural gas commodity prices in 2025 are one-third to one-fifth of Europe's (the United Kingdom's and the EU's), and average US electricity prices are roughly half. These significant differences in basic energy costs primarily result from the FERC's industry regulatory reforms, which culminated in its 1999 Certificate Policy Statement.
Dr. Makholm emphasizes that the genius of the FERC's final action in 1999 was to establish rules for its withdrawal as a decision maker from the US natural gas industry. It succeeded splendidly in its 1999 action, after which the FERC stopped regulating pipeline market entry in the traditional sense and instead oversaw the rules and methods by which a highly competitive interstate pipeline industry could essentially regulate itself. Dr. Makholm notes that no industry like the interstate natural gas pipeline sector regulates itself for long as there are too many competing interests at stake in such a dynamic industry. Such was especially true as greenhouse gas (GHG) considerations began to influence FERC decisions regarding new pipeline capacity entry. As a result, 19 years after its 1999 actions, the FERC opened a new docket in its PL18-1 Notice of Inquiry. In that notice, the FERC expressed its interest in revisiting three major questions regarding its 1999 action.
The FERC received over 3,000 comments, including from Dr. Makholm, who provided a history of the industry conflicts that led to the separation of the natural gas market from the interstate pipeline industry, highlighting the success of the FERC's actions. Dr. Makholm also warned the FERC of the problems likely to ensue if it attempted to broaden its NGA responsibilities to include GHG considerations in the sources and end uses of new interstate transport projects.
On 18 February 2022, the FERC issued two new policy statements to replace its 1999 action. Both policy statements passed by a slim partisan vote (3–2), with lengthy and highly critical dissents calling into question the FERC's authority to take such actions under the NGA—essentially inviting the courts to intervene. Dr. Makholm comments that both dissents directly addressed the FERC's constitutional responsibilities and its ability to oversee the orderly regulation of such a productive industry for the US economy.
Dr. Makholm concludes that a different and more level-headed bipartisan FERC resolved its own problem, maintaining what he would consider the most successful single action involving public interest in its long history.
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