Commissioner James Danly Statement
October 23, 2023
Docket No. CP22-468-000
I concur in the Commission’s decision to grant the application of Trailblazer Pipeline Company LLC (Trailblazer) and Rockies Express Pipeline LLC under Natural Gas Act (NGA) sections 7(b) and 7(c).[1]
Additionally, I concur in the determinations in paragraphs 125 and 126: the social cost of greenhouse gases (GHG) is neither useful nor part of the Commission’s decision making and the Commission offers no means by which to assess the significance of GHG emissions.[2] Specifically, paragraphs 125 and 126 explain: (1) the disclosure of the social cost of GHG emissions is “for informational purposes”; (2) for the social cost of GHGs, “there are no criteria to identify what monetized values are significant for [National Environmental Policy Act (NEPA)] purposes”; (3) the Commission is not “aware of any . . . method,” including the social cost of GHGs, “that would enable the Commission to determine the significance of reasonably foreseeable GHG emissions”; and (4) therefore, there are “no accepted tools or methods for the Commission to use to determine significance.”[3] This language made its first appearance in orders on the April 20, 2023 open meeting.[4] I voted for this language, as did two of my colleagues, Chairman Phillips and Commissioner Christie.[5]
I also concur in the Commission’s explanation that it is the Commission’s order that controls and therefore any language in the Environmental Assessment (EA) that is in tension with the Commission’s order is not relied on or adopted by the Commission.[6] We have had to resort to this language due to inconsistencies between the environmental documents issued by staff and the contents of the Commission’s orders.[7]
Now, I turn to those parts of the order from which I dissent.
I would not have included the calculations of the social cost of GHGs in the Commission’s order.[8] As I explained in my separate statement in Boardwalk, that issuance marked a change in the Commission’s approach to the social cost of GHGs in its orders.[9] In a break with this recent practice, Boardwalk and the orders voted on at the September 21, 2023 Commission meeting, while including language from the April Orders, also include calculations for the social cost of GHGs.[10] I do not support their inclusion in this order, both because their inclusion breaks with recent practice and because the calculations are meaningless in light of the very finding, stated explicitly in the text of the Commission’s order, that the social cost of GHGs cannot be used for any meaningful purpose to inform project-level analysis, including the assessment of significance. That is why those calculations are being disclosed solely “for informational purposes.” Though I object to their inclusion, surplusage, even when specifically declared to be irrelevant to the reasoning of an order, is not, in itself, unlawful. The Commission has acknowledged, time and again, that the inclusion of these calculations in an environmental document is “[f]or informational purposes” only and has not included the calculations in several orders when they already appear in the NEPA document.[11] The Commission should not have changed course.
Even more puzzling is how the Commission characterizes the calculations in this order. The Commission refers to staff’s calculation as an “avoided social cost of the reduced GHGs.”[12] What exactly is that? How did staff arrive at either the calculation or, for that matter, the decision to employ this new rubric? Since the calculation is framed in such a way as to suggest that there are costs associated with reducing GHG emissions, how are those costs calculated and how are they included in the numbers presented? Do they include the costs associated with switching from GHG emitting sources of energy to non-GHG emitting sources? Does it take into account other potential benefits that GHG emitting sources have as compared to their alternatives? None of this is clear. Of course, I understand that the entire process of calculating the social cost of carbon (or presumably an ad hoc variant) purports to sound in cost benefit analysis, so a negative price would necessarily be contemplated under certain circumstances. But what does this calculation do in this order, what is encompassed within its terms, and how is it expected to aid the Commission’s decision making? Is it, in fact, different at all from the social cost of GHGs?
Aside from the above, there is an obvious logical failure in this order. Despite stating later in the order that we have no means by which to assess the significance of GHG emissions the majority also includes a restatement of a sentence in the EA, which states that that “‘[w]hile construction of the Project would increase the atmospheric concentration of GHGs in combination with past, current, and future emissions from all other sources globally and contribute incrementally to future climate change impacts, overall, [p]roject operations would reduce potential GHG emissions due to the retirement of existing facilities.’”[13] It is unclear exactly what this means and, more troubling is the simple fact that neither staff nor the Commission have any idea whether the project would “contribute incrementally to future climate change impacts.” The Commission has declared as much. So why repeatedly include such statements? How does such speculation inform the Commission’s decision making? Quite simply, it does not.
Finally, I want to address the standard for an abandonment under NGA section 7(b).[14] That section provides that,
[n]o natural-gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without the permission and approval of the Commission first had and obtained, after due hearing, and a finding by the Commission that the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or that the present or future public convenience or necessity permit such abandonment.[15]
As the Supreme Court has explained, under NGA section 7(b) the Commission is “given control over the abandonment of [jurisdictional] facilities or of service.”[16] The primary consideration in assessing an abandonment is continuity of service.[17] And as today’s order recognizes, “[t]he Lease Agreement allows Trailblazer to ensure continuity of service to its customers, with the same receipt and delivery points and at the same rates, after the Abandoned Facilities are removed from service.”[18]
And when arriving at our determinations under NGA section 7, the Supreme Court has explained that the inclusion of the term “public interest” in our statute is not “a broad license to promote the general public welfare”—instead, it “take[s] meaning from the purposes of the regulatory legislation.”[19] As the Supreme Court has instructed us, “[t]he fundamental purpose of the Natural Gas Act is to assure an adequate and reliable supply of gas at reasonable prices,”[20] or in other words, “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[21] Therefore, our inquiry under NGA section 7(b)—as with inquiries under NGA section 7(e) and NGA section 3[22]—and the considerations relevant to standards under the NGA, take meaning from the purpose of the NGA. Finally, I want to reiterate that the fact that Trailblazer states that it intends to convert the abandoned pipeline to carbon dioxide (CO2) transportation service in the future is not relevant to the inquiry of whether the abandonment is permitted by the public convenience or necessity.[23] Such anticipated future use is non-jurisdictional to the Commission.[24]
For these reasons, I respectfully concur in part and dissent in part.
________________________
James P. Danly
Commissioner
[1] 15 U.S.C. §§ 717f(b),717f(c).
[2] See Trailblazer Pipeline Company LLC, 185 FERC ¶ 61,039, at PP 125-126 (2023) (Trailblazer).
[3] Id.
[4] See Driftwood Pipeline LLC, 183 FERC ¶ 61,049, at PP 61, 63 (2023); Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047, at PP 20-21, 25 (2023); Rio Grande LNG, LLC, 183 FERC ¶ 61,046, at PP 92-94, 101 (2023); see also Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047 at P 20 (“although we are including the social cost of GHG figures for informational purposes, we find that because the social cost of GHGs tool was not developed for project level review and, as discussed below, does not enable the Commission to credibly determine whether the GHG emissions are significant, section 1502.21 of the [Council on Environmental Quality (CEQ)] regulations does not require its use in this proceeding”); Rio Grande LNG, LLC, 183 FERC ¶ 61,046 at P 92 (same) (collectively, April Orders).
[5] I pause to note that the referenced language was not included in an order voted on at the July 27, 2023 Commission meeting. See Transcon. Gas Pipe Line Co., LLC, 184 FERC ¶ 61,066 (2023). I am pleased that the language is included in this issuance, and I want to emphasize that the language, as included in this order, does not intertwine my colleagues’ view that downstream GHG emissions (though not at issue here) from local distribution companies are reasonably foreseeable—a position that I have consistently disagreed with and continue to disagree with, as explained below—with the language explaining that there is no means by which the Commission can determine the significance of an amount of GHG emissions.
[6] See Trailblazer, 185 FERC ¶ 61,039 at P 127 (“We note that the analysis in the EA provides substantial evidence for our conclusions in this order, but that it is the order itself that serves as the record of decision, consistent with the Commission’s obligations under NEPA and the Administrative Procedure Act. For that reason, to the extent that any of the analysis in the EA is inconsistent with or modified by the Commission’s analysis and findings in the order, it is the order that controls and we do not rely on or adopt any contrary analysis in the EA.”).
[7] See Transcon. Gas Pipe Line Co., LLC, 184 FERC ¶ 61,066 (Danly, Comm’r, dissenting in part at P 14) (“We have witnessed environmental documents including language that runs contrary to Commission orders.”) (citations omitted). Compare WBI Energy Transmission, Inc. Wahpeton Expansion Project Final EIS, Docket No. CP22-466-000, at 4-118 (Apr. 7, 2023) (“The Commission stated in a recent Order that a project’s share of contribution to GHG emissions at the national level provides a reasoned basis to consider the significance of the Project’s GHG emissions and their potential impact on climate change; and when states have GHG emissions reduction targets, the Commission will endeavor to consider the GHG emissions of a project on those state goals (or state inventories if the state does not have emissions targets.)”) (citing N. Nat. Gas Co., 174 FERC ¶ 61,189, at P 29 (2021) (Northern Natural)), with Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 (2022) (Danly, Comm’r, concurring in the judgment at PP 2-3) (disagreeing with Northern Natural and explaining that “there is no standard by which the Commission could, consistent with our obligations under the law, ascribe significance to a particular rate or volume of GHG emissions”) (citation omitted), and with Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 (Phillips & Christie, Comm’rs, concurring at P 2) (“depart[ing] from Northern Natural, where the Commission stated that emissions for a project were not significant,” explaining that “[i]n Northern Natural, the Commission disclosed the yearly emissions volumes and the estimated contribution to national and state emissions estimates, and then stated that, based on this record, that the emissions were not significant,” and stating that “[i]t is not clear how this determination was made or how a finding of ‘significance’ would have affected our duties and authority under the Natural Gas Act”) (citations omitted). Compare Boardwalk Storage Co. LLC BSC Compression Replacement Project Environmental Assessment, Docket No. CP22-494-000, at 48 (Mar. 13, 2023) (“We include a disclosure of the social cost of GHGs (also referred to as the [‘]social cost of carbon’ [SCC]) to assess climate impacts generated by each additional metric ton of GHGs emitted by the Project.”), with Golden Pass LNG Terminal LLC, 180 FERC ¶ 61,058, at P 24 (2022) (rejecting an argument raised in a comment that “the EA should use the social cost of GHGs (also referred to as the ‘social cost of carbon’ [SCC]) to assess climate impacts generated by each additional ton of GHGs that would be emitted or saved as a result of authorizing the proposed amendment, and that all GHG emissions are significant” by explaining that “we are not relying on or using the social cost of GHGs estimates to make any finding or determination regarding either the impact of the project’s GHG emissions or whether the project is in the public convenience and necessity”) (citations omitted). Notably, the Commission does not review or approve the contents of the EAs and EISs issued by staff. Staff, for those documents, act under the supervision of the Chairman. See also 42 U.S.C. § 7171(c) (explaining that “[t]he Chairman shall be responsible on behalf of the Commission for the executive and administrative operation of the Commission, including functions of the Commission with respect to . . . the supervision of personnel employed by or assigned to the Commission, except that each member of the Commission may select and supervise personnel for his personal staff . . . .”) (emphasis added). But great care must be exercised to ensure that environmental documents adhere to Commission precedent. Cf. Great River Hydropower, LLC, 135 FERC ¶ 61,151, at P 44 (2011) (explaining that if a delegated order “is inconsistent with [Commission] precedent . . . , it was wrongly decided”).
[8] See Trailblazer, 185 FERC ¶ 61,039 at P 113.
[9] See generally Boardwalk Storage Co., LLC, 184 FERC ¶ 61,062 (2023) (Boardwalk) (Danly, Comm’r, concurring at PP 1-7).
[10] See Boardwalk, 184 FERC ¶ 61,062 at P 24. Following the Commission’s adoption at the April open meeting of our new social cost of GHGs language, our orders have not included those calculations when they have appeared in the Commission staff’s environmental documents. See Equitrans, L.P., 183 FERC ¶ 61,200, at P 47 (2023) (Equitrans) (explaining that “[f]or informational purposes, Commission staff estimated the social cost of GHGs associated with reasonably foreseeable emissions from the project.”). Even before the April 20, 2023 Commission meeting, the calculations were not included in several orders where the environmental document already contained the calculations. See, e.g., Cameron LNG, LLC, 182 FERC ¶ 61,173, at P 37 (2023) (“Further, the EA, for informational purposes, disclosed the social cost of GHGs associated with the project’s reasonably foreseeable GHG emissions.”) (footnote omitted); Commonwealth, LLC, 181 FERC ¶ 61,143 at P 75 (stating that “the final EIS disclosed the social cost of GHGs associated with the project’s reasonably foreseeable GHG emissions” and not including the calculations in the order) (citation omitted). I note that there are some inconsistencies in this prior to the issuance of the orders voted on at the April open meeting, with occasional orders including the calculations. In every circumstance, though, I have objected to the inclusion of the social cost of GHGs calculations in our orders and will continue to do so. Instead, the Commission has included the disclosure of the social cost of GHGs in its orders “for informational purposes” when those calculations were not included as part of the EAs or EISs or when the calculation in the staff’s environmental document included (improperly) downstream emissions that are not reasonably foreseeable, e.g., the downstream emissions from exports. See Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047 at P 24 (including the calculations in the remand order because they were not in the environmental document); Rio Grande LNG, LLC, 183 FERC ¶ 61,046 at PP 98-99 (same); Driftwood Pipeline LLC, 183 FERC ¶ 61,049 at PP 57 nn.109 & 112, 61-62 (disclosing a “revised estimate of the social cost of GHGs associated with the reasonably foreseeable emissions” in the Commission’s order because the calculation in the final EIS included in the calculation downstream GHG emissions from exports, which are not reasonably foreseeable).
[11] E.g., Equitrans, 183 FERC ¶ 61,200 at P 47.
[12] Trailblazer, 185 FERC ¶ 61,039 at P 113.
[13] Id. (citing EA at 217).
[14] 15 U.S.C. § 717f(b).
[15] Id.
[16] Fed. Power Comm’n v. Hope Nat. Gas Co., 320 U.S. 591, 611 (1944); see also Sunray Mid-Con. Oil Co. v. Fed. Power Comm’n, 364 U.S. 137, 141 (1960) (“Section 7(b) of the Natural Gas Act regulates the abandonment by natural-gas companies of their facilities and services subject to the jurisdiction of the Commission.”).
[17] See, e.g., Transcon. Gas Pipe Line Co., LLC, 170 FERC ¶ 61,055, at P 15 (2020) (“The Commission has stated that continuity and stability of existing service are the primary considerations in assessing the public convenience or necessity of a permanent cessation of service under section 7(b).”) (citing Mich. Consol. Gas Co. v. FPC, 283 F.2d 204, 214 (D.C. Cir. 1960); Transcon. Gas Pipe Line Corp. v. FPC, 488 F.2d 1325, 1328 (D.C. Cir. 1973)). Cf. Sunray Mid-Con. Oil Co., 364 U.S. at 143 (“If the pipeline company were left free to cease its service to the local distribution company, a local economy which had grown dependent on natural gas as a fuel would be at its mercy. And this, though the primary practical problem that led to the passage of the [NGA] was the great economic power of the pipeline companies as compared with that of communities seeking natural gas service.”) (citation omitted).
[18] Trailblazer, 185 FERC ¶ 61,039 at P 34 (footnote omitted).
[19] NAACP v. FPC, 425 U.S. 662, 669 (1976) (NAACP).
[20] Cal. v. Southland Royalty Co., 436 U.S. 519, 523 (1978).
[21] NAACP, 425 U.S. at 669-70; accord Myersville Citizens for a Rural Cmty., Inc. v. FERC, 783 F.3d 1301, 1307 (D.C. Cir. 2015). (quoting NAACP, 425 U.S. at 669-70). I note that the Supreme Court has also recognized the Commission has authority to consider “other subsidiary purposes,” such as “conservation, environmental, and antitrust questions.” NAACP, 425 U.S. at 670 & n.6 (citations omitted). But all subsidiary purposes are, necessarily, subordinate to the statute’s primary purpose.
[22] 15 U.S.C. §§ 717f(b), 717f(e), 717b.
[23] See, e.g., Trunkline Gas Co., LLC, 145 FERC ¶ 61,108, at P 89 (2013) (“the eventual disposition of the pipeline after abandonment, whether it would be left idle, converted for another use, or eventually sold to another entity, is not a factor in the Commission’s decision to grant abandonment.”).
[24] See Cortez Pipeline Co., 7 FERC ¶ 61,024 (1979) (“finding that the construction and operation of a proposed pipeline and the transportation of predominantly pure carbon dioxide in interstate commerce are not within the jurisdiction of the Commission”).