FERC’s approval rate should not come as a surprise. Unlike any other federal agency, FERC is funded entirely by the industries it regulates — that’s right, FERC gets its entire budget from the industry it is supposed to oversee.
How does it work? Basically, FERC issues charges on the industry it regulates calculated to cover all of its costs, including an agency budget that has grown 50%, from $200 million to $300 million, in just a 10-year period from 2004 to 2014. This means that the more pipelines, gas delivery, and LNG facilities FERC approves the more fees it is able to collect to support its fast ballooning budget.
This industry-financing mechanism not only encourages a biased approval process for proposed projects, but it also provides FERC with a significant degree of insulation from Congress and the legislative branch of government that no other independent federal agency enjoys.
construction activity for any pipeline project. And yet we know for a fact that violations of FERC-issued pipeline construction approvals border on routine. For example, the Tennessee Gas Pipeline Company’s 300 Line Upgrade Project was found to have major failures harming the environment and violating the law. Who recorded these failures? FERC. And what were the penalties the company incurred from FERC? None. FERC didn’t even issue a stop-work order to make sure the company fixed the problems it was causing before allowing it to continue with its damaging construction.
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