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Commissioner Richard Glick Statement
March 7, 2019

Docket No. CP-18-89-000 PDF

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Partial Dissent regarding Empire Pipeline, Inc.

In today’s order, the Commission authorizes Empire Pipeline, Inc’s (Empire) proposed Empire North Project (Project), which will allow Empire to provide an additional 205,000 dekatherms per day (Dth/d) of firm transportation service to local gas distribution markets and market centers in the northeastern United States and Canada.1 As it has done previously, the Commission again refuses to consider whether the Project’s contribution to climate change from these emissions would be significant, even though it quantified the increase in direct greenhouse gas (GHG) emissions from the Project’s construction and operation. Moreover, the Commission chose not to consider the Project’s contribution to climate change from upstream and downstream GHG emissions. This failure to evaluate and consider the Project’s harm from its contribution to climate change flouts our obligations under the Natural Gas Act (NGA)2 and the National Environmental Policy Act (NEPA).3 I cannot countenance an approach that acts as if climate change is not relevant to the public interest. So long as the Commission adheres to such a deeply misguided approach, I have no choice but to dissent from its orders, regardless of what I might otherwise think about the benefits of a project. Because I believe that the Commission cannot find that Empire’s Project is in the public interest without meaningfully considering the significance of its contribution to climate change, I respectfully dissent in part.

We know with certainty what causes climate change: It is the result of GHG emissions, including carbon dioxide and methane, which can be released in large quantities through the production, transportation, and the consumption of natural gas and other fossil fuels. The Commission recognizes this relationship in the record before us today, acknowledging that climate change is “driven by accumulation of GHG in the atmosphere” and that the Project’s “construction and operation, as well as downstream emissions, would . . . contribute incrementally to future climate change impacts.”4 It is therefore critical that the Commission carefully consider the Project’s contribution to climate change, both in order to fulfill NEPA’s requirements and to determine whether the Project is in the public interest under the NGA.5

Today’s order fails that standard. The Commission, as it has been doing since last year, maintains that it need not consider whether the Project’s contribution to climate change from increased GHG emissions is significant because it lacks a means to do so—or at least so it claims.6 Although that conclusion is dubious in its own right (as discussed further below), it also has the critically important effect of excluding any meaningful consideration of climate change from the Commission’s public interest determination. The reason why lies in the details of how the Commission conducts its analysis under the NGA and NEPA. The Commission asserts that it evaluates the public interest by first considering whether a proposed pipeline’s economic benefits outweigh its economic harms. Then, for a project with net economic benefits, the Commission determines whether the project would be “environmentally acceptable” by examining whether the impacts are “significant” and whether those impacts can be mitigated. It then claims to consider the project’s environmental effects.

The sleight of hand in the Commission’s approach is that it uses its purported inability to evaluate the harm from climate change as a basis to exclude that harm from its public interest determination. Today’s order concludes that the Project will not have a significant environmental impact7 without actually assessing the significance of the harm from Project’s contribution to climate change.8 As a result, the Commission’s public interest determination rests on the misguided and unsupported assumption that the Project is not having a significant environmental impact through its contribution to climate change. Approving a project that has the potential to contribute significantly to the harms caused by climate change without meaningfully considering that impact is contrary to law, arbitrary and capricious, and not the product of reasoned decisionmaking.9

The Commission also ignores the Project’s reasonably foreseeable GHG emissions from downstream combustion and upstream production, adopting an overly narrow and circular definition of indirect effects10 and disregarding the Project’s central purpose—to facilitate natural gas consumption.11 Even though Empire explains that the Project is designed to allow “regionally produced natural gas” to serve “local gas distribution markets and market centers in the northeastern United States,” including “residential, commercial and industrial end-users,”12 both the record and the Commission’s omit any discussion of these emissions.

The Commission also gives no consideration to whether the Project will lead to an increase in upstream GHG emissions from additional production. The Commission cannot ignore the fact that adding firm transportation capacity is likely to “spur demand” for natural gas.13 Indeed, if a proposed pipeline neither increases the supply of natural gas available to consumers nor decreases the price that those consumers would pay, it is hard to imagine why that pipeline would be “needed” in the first place. Moreover, the Project cannot possibly achieve the benefits that Empire advances—improved reliability and access to economic supplies of natural gas—unless consumers actually use the natural gas the Project will transport.14 For these reasons, the Commission must at least examine the effects that an expansion of pipeline capacity might have on consumption and production.15

Even where exact information regarding the source of the gas to be transported and its end use is not available, the Commission will often be able to produce comparably useful information based on reasonable forecasts of the GHG emissions associated with production and consumption.16 Forecasting environmental impacts is a regular component of NEPA reviews and a reasonable estimate may inform the federal decisionmaking process even where the agency is not completely confident in the results of its forecast.17 Similar forecasts can play a useful role in the Commission’s evaluation of the public interest, even in those instances when the Commission must make a number of assumptions in its forecasting process.18

Quantifying the Project’s GHG emissions is a necessary, but not sufficient, step in meeting the Commission’s obligations to consider the Project’s environmental effects associated with climate change. NEPA and the NGA’s public interest standard require the Commission to consider not the GHG emissions themselves but the resulting environmental impact.19 The Commission claims that it cannot determine whether the Project’s contribution to climate change is significant, relying instead on the vague—and circular—conclusion that it “cannot determine the Project’s incremental physical impacts due to climate change on the environment.”20 These bald assertions are no substitute for fulfilling the Commission’s statutory responsibility to carefully—and meaningfully—consider the public interest in the Project.

Under NEPA, the Commission must consider the harm from the Project’s GHG emissions when the emissions are direct and indirect effects of the Project.21 In Sabal Trail, the court left no room to question that GHG emissions from the downstream combustion of natural gas can be “an indirect effect of authorizing” a pipeline project, which the Commission can reasonably foresee, and which the agency has a legal authority to consider and mitigate. 22 Moreover, as the court explained, section 7 of the NGA requires the Commission to balance “‘the public benefits [of a proposed pipeline] against the adverse effects of the project,’ including adverse environmental effects.”23 If a pipeline’s adverse effects outweigh its public benefits, the project is not in the public interest and the Commission must deny the section 7 certificate.24 As relevant here, that means that the section 7 balancing test must incorporate an analysis of the environmental harms, including those caused by a proposed pipeline’s contribution to climate change.25 The Commission’s failure to consider the harm from the Project’s GHG emissions under NEPA and in its public interest determination reveals a stubborn adherence to the views that the Sabal Trail court rejected. It is also a feeble excuse for failing to use the Social Cost of Carbon to assess the Project’s contribution to climate change.

Contrary to the Commission’s conclusion today, the Commission has the tools to determine the Project’s environmental impact from its contribution to climate change. This is precisely what the Social Cost of Carbon delivers. By measuring the long-term damage done by a ton of carbon dioxide, it provides a method for linking GHG emissions to particular climate impacts, thereby providing both the Commission and the public with the “hard look” required to assess the magnitude of a proposed project’s impact on the climate. Especially when it comes to a global problem like climate change, a measure for translating a discrete project’s climate impacts into concrete and comprehensible terms can play a useful role in the NEPA process by putting the harms caused by the project in terms that are readily accessible for both agency decisionmakers and the public at large.

As in almost every aspect of the Commission’s regulation—from reviewing environmental and safety impacts to calculating expected rates of return on investment dollars—the Commission can manage uncertainty through probability and statistical analyses. In this same vein, “NEPA does not demand that every federal decision be verified by the reduction to mathematical absolutes for insertion into a precise formula.”26 The fact that the Commission may not know the exact magnitude of the Project’s contribution to climate change is no excuse for assuming the impact is zero. Instead, the Commission must engage in a case-specific inquiry into the reasonably foreseeable effects and estimate the potential impact—making assumptions where necessary—and then give that estimate the weight it deserves.

The Commission has recognized that a variety of environmental impacts are best considered qualitatively but once again provides no answer for why the Commission—as the agency with both the mandate and technical expertise to consider the public interest in the Project—cannot use a quantitative measure of the Project’s contribution to climate change as input to making a qualitative determination of its significance.27 In effect, the Commission maintains that it has satisfied its obligation under NEPA to consider the harm caused by the Project’s contribution to climate change by providing a generic, qualitative discussion that concludes it cannot accurately assess the impacts of GHG emissions generally. The reality is the Commission has still failed to make an explicit determination of whether the harm associated with the Project’s contribution to climate change is significant. In order to satisfy NEPA, the environmental review documents must both disclose direct and indirect impacts, which can include quantitative and qualitative considerations, and disclose their significance.28

To support this directive, CEQ regulations expressly outline a framework for determining whether the Project’s impacts on the environment will be considered significant—and this CEQ framework requires considerations of both context and intensity, noting that significance of an action must be analyzed in several contexts.29 The Commission can use these factors to develop a framework to consider the significance of the Project’s impact. Its failure to do so is no excuse for neglecting to consider the Project’s harm from its contribution to climate change.

Climate change poses an existential threat to our security, economy, environment, and, ultimately, the health of individual citizens. Unlike many of the challenges that our society faces, we know with certainty what causes climate change: It is the result of GHG emissions, including carbon dioxide and methane—which can be released in large quantities through the production and the consumption of natural gas. Congress determined under the NGA that no entity may transport natural gas interstate, or construct or expand interstate natural gas facilities, without the Commission first determining the activity is in the public interest. This requires the Commission to find, on balance, that a project’s benefits outweigh the harms, including the environmental impacts from climate change that result from authorizing additional transportation. Accordingly, it is critical that, as an agency of the federal government, the Commission comply with its statutory responsibility to document and consider how its authorization of a natural gas pipeline facility will lead to the emission of GHGs, contributing to climate change.

For these reasons, I respectfully dissent in part.

                                               

    1 Empire Pipeline, Inc., 166 FERC ¶ 61,172 (2019) (Certificate Order).
    2 15 U.S.C. 717f (2012).
    3 National Environmental Policy Act of 1969, Pub. L. No. 91–190, 83 Stat. 852.
    4 Empire North Project Environmental Assessment (EA) at 47.
    5 Section 7 of the NGA requires that, before issuing a certificate for new pipeline construction, the Commission must find both a need for the pipeline and that, on balance, the pipeline’s benefits outweigh its harms. 15 U.S.C. § 717f (2012). Furthermore, NEPA requires the Commission to take a “hard look” at the environmental impacts of its decisions. See 42 U.S.C. § 4332(2)(C)(iii); Balt. Gas & Elec. Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 97 (1983). This means that the Commission must consider and discuss the significance of the harm from a pipeline’s contribution to climate change by actually evaluating the magnitude of the pipeline’s environmental impact. Doing so enables the Commission to compare the environment before and after the proposed federal action and factor the changes into its decisionmaking process. See Sierra Club v. FERC, 867 F.3d 1357, 1374 (D.C. Cir. 2017) (Sabal Trail) (“The [FEIS] needed to include a discussion of the ‘significance’ of this indirect effect.”); 40 C.F.R. § 1502.16 (a)–(b) (An agency’s environmental review must “include the environmental impacts of the alternatives including the proposed action,” as well as a discussion of direct and indirect effects and their significance.) (emphasis added)). Today’s decision and the associated record omit any meaningful discussion of the Project’s contribution to climate change. That omission renders the Commission’s order arbitrary and capricious and not the product of reasoned decisionmaking.
    6 EA at 48 (explaining that “we cannot determine whether the Project’s contribution to cumulative impacts on climate change would be significant”).
    7 Certificate Order, 166 FERC ¶ 61,172 at P 46 (concluding that the Commission’s approval of the Project “would not constitute a major federal action significantly affecting the quality of the human environment”).
    8 In the Project’s EA, the Commission quantified the Project’s GHG emissions from construction and operation and disclosed these emissions. EA at 39–40 & Tables 11 & 12 (estimating the Project’s proposed new GHG emissions from construction and operation).
    9 Section 7 of the NGA “requires the Commission to evaluate all factors bearing on the public interest,” Atl. Ref. Co. v. Pub. Serv. Comm’n, 360 U.S. 378, 391 (1959), which Sabal Trail held includes a proposed pipeline’s contribution to the harms caused by climate change, 867 F.3d at 1373.
    10 See San Juan Citizens All. et al. v. U.S. Bureau of Land Mgmt., No. 16-CV-376-MCA-JHR, 2018 WL 2994406, at *10 (D.N.M. June 14, 2018) (holding that it was arbitrary for the Bureau of Land Management to conclude “that consumption is not ‘an indirect effect of oil and gas production because production is not a proximate cause of GHG emissions resulting from consumption’” as “this statement is circular and worded as though it is a legal conclusion”). The Commission must use its “best efforts” to identify and quantify the full scope of the environmental impacts and, as the U.S. Court of Appeals for the District of Columbia found in Sabal Trail, educated assumptions are inevitable in the process of emission quantification. See 867 F.3d at 1374.
    11 EA at 2 (explaining that the purpose and need of the Project is to provide incremental interstate pipeline transportation capacity to allow “abundant, reliable, and economic supplies of regionally produced natural gas” to reach the market).
    12 Empire Certificate Application at 1–2.
    13 Barnes v. U.S. Dep’t of Transp., 655 F.3d 1124, 1138 (9th Cir. 2011) (holding that it “is completely inadequate” for an agency to ignore a project’s “growth inducing effects” where the project has a unique potential to spur demand); id. at 1139 (distinguishing City of Carmel-by-the-Sea v. U.S. Dep’t of Transp., 123 F.3d 1142 (9th Cir. 1997), which the majority relies on in today’s order) (“[O]ur cases have consistently noted that a new runway has a unique potential to spur demand, which sets it apart from other airport improvements, like changing flight patterns, improving a terminal, or adding a taxiway, which increase demand only marginally, if at all.”); id. at 1139 (“[E]ven if the stated purpose of [a new airport runway project] is to increase safety and efficiency, the agencies must analyze the impacts of the increased demand attributable to the additional runway as growth-inducing effects.”).
    14 Empire Certificate Application at 20.
    15 As the United States Court of Appeals for the Eighth Circuit explained in Mid States Coal. for Progress v. Surface Transp. Bd.—a case that also involved the downstream emissions from new infrastructure for transporting fossil fuels—when the “nature of the effect” (end-use emissions) is reasonably foreseeable, but “its extent is not” (specific consumption activity producing emissions), an agency may not simply ignore the effect. 345 F.3d 520, 549 (8th Cir. 2003).
    16 NEPA, after all, does not require exact certainty; instead, it requires that the Commission engage in reasonable forecasting and estimation of possible effects of a major federal action where doing so would further the statute’s two-fold purpose of ensuring that the relevant agency will “have available, and will carefully consider, detailed information concerning significant environmental impacts” and that this information will also be “available to the larger audience that may also play a role in both the decisionmaking process and the implementation of that decision.” Dep’t of Transp. v. Pub. Citizen, 541 U.S. 752, 768 (2004) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349 (1989)); Del. Riverkeeper Network v. FERC, 753 F.3d 1304, 1310 (2014).
    17 In determining what constitutes reasonable forecasting, it is relevant to consider the “usefulness of any new potential information to the decisionmaking process.” Sierra Club v. U.S. Dep’t of Energy, 867 F.3d 189, at 198 (D.C. Cir. 2017) (citing Pub. Citizen, 541 U.S. at 767).
    18 In comments submitted in the Commission’s pending review of the natural gas certification process, the Environmental Protection Agency identified a number of tools the Commission can use to quantify the reasonably foreseeable “upstream and downstream GHG emissions associated with a proposed natural gas pipeline.” These include “economic modeling tools” that can aid in determining the “reasonably foreseeable energy market impacts of a proposed project.” U.S. Environmental Protection Agency, Comments, Docket No. PL18-1-000, at 3–4 (filed June 21, 2018) (explaining that the “EPA has emission factors and methods” available to estimate GHG emissions—from activities upstream and downstream of a proposed natural gas pipeline—through the U.S. Greenhouse Gas Inventory and the Greenhouse Gas Reporting Program); see Certification of New Interstate Natural Gas Facilities, Notice of Inquiry, 163 FERC ¶ 61,042 (2018).
    19 NEPA requires the Commission to reach a determination regarding the significance of the Projects’ indirect effects from upstream and downstream GHG emissions. Further, under section 7 of the NGA, the Commission must consider those harms as part of its determination whether the Projects are in the public interest. See Florida Southeast Connection, LLC, 164 FERC ¶ 61,099, at 2–3, 5–8 (Glick, Comm’r, dissenting).
    21 40 C.F.R. § 1508.8 (defining direct effects and indirect effects).
    22 Sabal Trail, 867 F.3d at 1374 (citing the Commission’s authority, pursuant to the NGA, to “attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require,” 15 U.S.C. 717f(e)).
    23 Id. at 1373 (quoting Myersville Citizens for a Rural Cmty. v. FERC, 783 F.3d 1301, 1309 (D.C. Cir. 2015)).
    24 See id. (explaining that the Commission may “deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment”).
    25 Id. (citing Minisink Residents for Envtl. Pres. & Safety v. FERC, 762 F.3d 97, 101-02 (D.C. Cir. 2014) and Myersville, 783 F.3d at 1309) (internal citations omitted); see also Pub. Utils. Comm’n of Cal. v. FERC, 900 F.2d 269, 281 (D.C. Cir. 1990) (The public interest standard under the NGA includes factors such as the environment and conservation, particularly as decisions concerning the construction, operation, and transportation of natural gas in interstate commerce “necessarily and typically have dramatic natural resource impacts.”).
    26 Sierra Club v. Lynn, 502 F.2d 43, 61 (5th Cir. 1974).
    27 As the Environmental Protection Agency has explained, the Commission may use estimates of the Social Cost of Carbon “for project analysis when [the Commission] determines that a monetary assessment of the impacts associated with the estimated net change in GHG emissions provides useful information in its environmental review or public interest determination.” United States Environmental Protection Agency, Comments, Docket No. PL18-1-000, at 4–5 (filed June 21, 2018). In addition, the Council on Environmental Quality recognized under a prior administration that monetizing an impact is appropriate in the NEPA document, if doing so is necessary for an agency to fully evaluate the environmental consequences of its decisions. See CEQ, Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews at 32-33 (Aug. 1, 2016), https://obamawhitehouse.archives.gov/
    sites/whitehouse.gov/files/documents/nepa_final_ghg_guidance.pdf
    PDF External Link.
    28 40 C.F.R. § 1502.16.
    29 Id. § 1508.27 (setting forth a list of factors agencies should rely on when determining whether a project’s environmental impacts are “significant” considering both “context” and “intensity”); id. (“‘Context’ . . . means that the significance of an action must be analyzed in several contexts such as society as a whole (human, national), the affected region, the affected interests, and the locality.”); id. (“‘Intensity’ . . . refers to the severity of the impact, . . . [including t]he degree to which” it affects considerations including “public health or safety” and the environment).
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