C-1: Commissioner Clements’ Concurrence in Part and Dissent in Part Regarding Texas Eastern Transmission, LP Gas Transmission Northwest, LLC

 Docket No.  CP22-2-000

I concur with the decision to issue a certificate of public convenience and necessity to Gas Transmission Northwest, LLC (GTN) for its GTN Xpress Project.[1]  I do so reluctantly because the states of Washington, Oregon, and California have raised serious questions concerning the present and future need for additional gas transportation service for customers in their states.  Unfortunately, the Commission’s superficial approach to assessing the need for new gas infrastructure has left us with a skeletal administrative record that raises more questions than it answers concerning the need for the project.  Lacking a suitable policy framework or established procedures for fully evaluating the need issue, the Commission practically forces itself to rely solely on precedent agreements to find the GTN Xpress Project is needed.  As I recently explained in a similar case, the Commission’s approach is becoming increasingly untenable as a combination of market forces and federal, state, and local climate protection policies signal potentially flat or declining demand for natural gas over time.[2]  The circumstances impacting the need for new pipeline capacity are far more complex than they were the Commission adopted its 1999 Certificate Policy Statement[3] and we should update the policy to address that complexity.  But today, given the Commission’s governing precedents on determining need[4] and our failure to develop a complete record on the need issue in this case, I am compelled to concur in the Order’s result.  However, as discussed below, I dissent from the Order’s language claiming the Commission is unable to determine the significance of the environmental impacts caused by the project’s greenhouse gas (GHG) emissions.[5]

The Commission’s 1999 Certificate Policy Statement calls on us to “consider all relevant factors reflecting on the need for the project.”[6]  The Statement specifies that these factors “might include, but would not be limited to, precedent agreements, demand projections, potential cost savings to customers, or a comparison of projected demand with the amount of capacity currently serving the market.”[7]  Necessary evidence “will usually include a market study.”[8]  With the conflicting arguments in this case concerning the need for the GTN XPress project, the Commission’s decisional process would have greatly benefited from market studies focused on present and future demand for natural gas in the specific markets that the project would serve.  The Commission could have asked for those studies, as well as more specific information about the current and future effect of state laws, regulations, and public and private actions designed to reduce GHG emissions.  Unfortunately, the Commission did not do that, leaving us with many unanswered questions. 

The most critical unanswered question in the Commission’s need analysis is what impact Washington, Oregon, and California’s climate and energy policies will have on natural gas demand in the areas served by the GTN Xpress Project.  Those three states, and many cities within them, have implemented a suite of ambitious climate measures.[9]  The states have clearly stated their intention to transition to zero-emission electricity (over thirty percent of regional gas consumption today is used to generate electricity),[10] and state utility regulators have implemented policies anticipating declining gas use.[11]  Unfortunately, the Commission is armed with neither the procedures, nor the data, nor seemingly the will, necessary to adequately assess how these state policies will impact need for the GTN Xpress Project in the specific markets it is designed to serve.

The Commission’s over-reliance on precedent agreements, though simple and expedient, prevents us from understanding the potential impact of climate-related laws and policies, as well as varied market factors, on natural gas demand and therefore on the need for new gas infrastructure.  In any given Natural Gas Act certificate matter, including this one, we have no meaningful ability to assess the risk of over-building and the concomitant risk of saddling ratepayers with the costs of underused facilities.  We have seen more frequent and active participation by states in our recent certificate proceedings as state climate policies have evolved, and we should expect that trend to continue.  The Commission should determine as a matter of policy how to consider and weigh relevant state laws, programs, and administrative determinations in future certificate proceedings. 

The Commission could readily address these deficiencies by adopting the need provisions of its draft revised Certificate Policy Statement issued in 2022.  Those provisions reaffirm the Commission’s commitment to considering all relevant factors, provide for submission of information on the end use of the project’s gas, encourage market studies for projects responding to increased demand, and detail other information relevant to the Commission’s assessment of need.[12]  The draft revised Certificate Policy Statement also encourages applicants to “submit analyses showing how market trends as well as current and expected policy and regulatory developments would affect future need for the project.”[13]

The Commission could well deny a future section 7 certificate application if it became more inquisitive and considered evidence of need beyond precedent agreements. Congress expressly provided for denial in enacting the Natural Gas Act in 1938, when the pipeline industry was in its infancy and just beginning to build an interstate natural gas pipeline network.  Section 7(e) of the statute provides that the Commission must affirmatively find that a proposed project “is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied.”[14]  Today, our country’s interstate natural gas pipeline network spans more than 300,000 miles,[15] which is enough pipe to encircle the planet twelve times.  To be sure, it is a good thing that the United States has such a robust natural gas pipeline system today.  But the dramatic expansion of the pipeline system and the increasingly complex set of variables that bear on project need in 2023 should have made the Commission more discerning on the need question, not less, which has been the unfortunate consequence of our myopic focus on precedent agreements.

Separately, I dissent from the Order’s assertion that the Commission is incapable of determining the significance of GHG impacts.[16]  As I have written before, the majority’s insistence that there are no acceptable tools for determining the significance of GHG emissions remains unsupported and gains nothing through near-constant repetition in the Commission’s recent orders issued under sections 3 and 7 of the Natural Gas Act.  In my concurrence in Transco[17], I explained the history of the language in Paragraphs 71 and 72 of the Order, which has come to be known as the “Driftwood compromise.”[18]  In Driftwood, the majority adopted unheralded new language declaring that there are no methods for assessing the significance of GHG emissions, and particularly criticizing the Social Cost of GHGs protocol.[19]  I have dissented from this language in Driftwood and subsequent orders for two reasons: (1) it reflects a final Commission decision that it cannot determine the significance of GHG emissions, despite the fact the Commission has never responded to comments in the GHG Policy Statement docket[20] addressing methods for doing so; and (2) the language departs from previous Commission precedent without reasoned explanation, thereby violating the Administrative Procedure Act.[21]  I dissent from Paragraphs 71 and 72 of this Order for the same reasons.

As I have said before, I do not know whether the Social Cost of GHGs protocol or another tool can or should be used to determine significance.  That is because the Commission has not seriously studied the answer to that question.  Rather, the majority simply decided there is no acceptable method, with no explanation of why the Commission departed from the approach taken in earlier certificate orders.[22]  I reiterate that the Commission should decide the important unresolved issues relating to our assessment of GHG emissions through careful deliberation in a generic proceeding with full transparency.

For these reasons, I respectfully concur in part and dissent in part.