Docket No. CP22-495-001
I dissent from today’s Rehearing Order[1] for the same two reasons I dissented from the Certificate Order.[2] First, the administrative record is insufficient to support the majority’s conclusion that the Texas to Louisiana Project (Project) is required by the public convenience and necessity.[3] Second, the majority’s insistence that there are no acceptable tools for determining the significance of the impacts of greenhouse gas (GHG) emissions is unsupported and arbitrary.[4] The Rehearing Order compounds these errors, and I dissent from it on the additional grounds that (1) the superficial analysis of alternatives in the environmental assessment (EA) for the Project violated the National Environmental Policy Act (NEPA)[5] and contributed to the Commission’s legally deficient assessment of the need for the Project; (2) the Commission made little effort to ascertain potentially foreseeable upstream and downstream GHG emissions, violating NEPA and undermining its ability to determine the public convenience and necessity under section 7 of the Natural Gas Act (NGA);[6] (3) the Commission should have used the Social Cost of Greenhouse Gas Protocol (SC-GHG Protocol) to determine whether Project-related greenhouse gas (GHG) emissions were significant and therefore required preparation of an environmental impact statement (EIS); and (4) the Commission was required to consider the SC-GHG values in determining if the Project is in the public interest under NGA section 7 but failed to explain whether and how it did so, thereby violating the Administrative Procedure Act (APA).[7]
The Rehearing Order cures none of the defects that I identified in the Certificate Order. As I pointed out in my dissent from the Certificate Order, the majority’s finding that the Project will enhance the “efficiency” of the natural gas market was drawn from thin air.[8] The Commission does not know—because Transco did not tell us—where EOG Resources’ (EOG) gas is coming from, what end-use customers it will serve,[9] or whether the gas will displace other producers’ gas in the marketplace.[10] In a belated effort to plug an evidentiary hole, the Rehearing Order cites the efficiency of selling natural gas at pooling points,[11] but that is irrelevant. Transco does not propose to establish a pooling point but instead proposes to expand its system’s capacity to bring EOG’s natural gas to the existing Compressor Station 65 Pooling Point. The majority offers no evidence or explanation regarding demand for EOG’s gas at the pooling point or anywhere else. Nor does it explain how transporting EOG’s gas to the pooling point will enhance market efficiency.[12] The Certificate Order’s failure to support or explain the finding on market efficiency violates the most basic APA requirements.[13] It also contravenes the Commission’s Certificate Policy Statement, which requires a demonstration that the Project’s public benefits (not Transco’s or EOG’s private interests) outweigh its adverse impacts.[14]
The Certificate Order essentially reflects a view that having more natural gas infrastructure to transport more natural gas supplies necessarily benefits the public. As Sierra Club correctly observes, if that were true the Commission would never reject a proposal to build new gas transportation capacity.[15] The NGA demands more of us, providing that the Commission shall deny a certificate application absent a showing that a proposed project is “required” by the public convenience and necessity.[16] The statute does not allow us the luxury of simply assuming, as the majority did here, that new gas infrastructure benefits the public.[17]
Not only is there insufficient evidence of any public benefit in this case, but there also is insufficient evidence that new construction is required to transport EOG’s gas to the Compressor Station 65 Pooling Point. Both the Certificate Order and the Rehearing Order cite to the truncated discussion of alternatives in the EA for the Project in finding that it is likely no pipelines near EOG’s production areas have capacity to meet EOG’s needs.[18] But the EA does not explain the basis for this conclusion, nor does it cite any source materials in support of its finding.[19] The Commission also relied on the EA for its conclusion that new construction would be required on other pipeline systems to meet EOG’s needs and that this theoretical “[c]onstruction of new (and/or expansion of unknown lengths of) pipeline” would have no environmental advantage over the Project.[20] Once again, the EA neither explains nor cites evidentiary support for these assertions, violating NEPA’s requirement for agency consideration of alternatives.[21] Moreover, the Commission’s unquestioning reliance[22] on the deficient EA undermined its NGA section 7 determination that the Project is needed. The Commission never fully evaluated whether EOG’s gas could be transported using existing pipeline capacity, drawing its section 7 need determination into serious question.[23]
I also dissent from the Rehearing Order because I agree with Sierra Club that the Commission failed its duty to investigate and analyze the foreseeability of downstream GHG emissions.[24] NEPA requires the Commission to “at least attempt to obtain the information necessary to fulfill its statutory responsibilities”[25] and to use “best efforts to find out all that it reasonably can.” [26] In this case, Commission staff made a single attempt to obtain the required information on end users with its January 31, 2023, data request. Transco gave a non-answer, saying there had been no change from the information provided in its certificate application. [27] However, the certificate application itself was vague,[28] which is presumably what prompted the data request in the first place. Rather than insisting on a complete record, the Commission jumped to the unsupportable conclusion that the downstream emissions were unforeseeable. That simply does not meet the “best efforts” standard the court applied in Birckhead.[29] Although the record in this case is both threadbare and seemingly inconsistent, it appears that Transco either had or could have obtained information from EOG on the end-use markets the Project would indirectly serve. For example, Transco’s certificate application stated that EOG’s customers will buy gas at a “relatively uniform rate” that requires “reliable, consistent access to markets.”[30] Transco must have had some information about the end-use customers to support that representation. Had the Commission insisted on a full answer to staff’s data request, it could have learned the basis for Transco’s statement and discovered the end-uses of the gas. The Commission also could have learned more about the end uses of the gas if it had required Transco to submit a market study, consistent with the Commission’s Certificate Policy Statement.[31]
The Commission made no attempt at all to identify the Project’s upstream emissions, again violating the Birckhead best efforts standard. Somehow, Transco and EOG knew enough about the upstream gas supply for Transco to represent that “no additional natural gas production is required for or associated with the Project.” [32] But the Commission did not require Transco to explain or substantiate this claim, leaving critical questions unaddressed. For example, considering Transco and EOG apparently know the gas supplies will come from existing wells, can they identify those wells or the fields in which they are located and if not, why not? The Commission’s failure to ask any questions whatsoever pertaining to the gas supplies renders its finding on the foreseeability of upstream GHG emissions unsupported and legally unsustainable.
I further dissent from the Rehearing Order because I agree with Sierra Club that the Commission was required to determine the significance of Project-related emissions for the purpose of deciding whether to prepare an EIS.[33] The D.C. Circuit recently confirmed that NEPA requires EAs to determine significance.[34] Both the EA and the Certificate Order failed to determine the significance of Project-related GHG emissions, thereby violating NEPA. The Commission could have and should have used the SC-GHG Protocol to assess the significance of Project-related GHG emissions in determining whether an EIS was required.[35] In another recent dissent, I explained in detail that the Commission’s continued refusal to use the SC-GHG Protocol in its decision-making (rather than just for public “informational purposes”) rests on outmoded reasoning that ignores important recent policy and scientific developments.[36] Every point I made in that dissent applies here.
The Commission also should have incorporated the SC-GHG values into its substantive decision-making but apparently failed to do so.[37] The courts have recognized that the Commission must consider the impacts of a proposed project’s GHG emissions in determining the public convenience and necessity under NGA section 7.[38] The Council on Environmental Quality (CEQ), which has statutory authority to guide implementation of NEPA across federal agencies, has determined that the SC-GHG Protocol generally should be used in agencies’ environmental analyses.[39] Rather than just disclosing the Project’s SC-GHG values for unspecified “informational purposes,”[40] the Commission should have factored the values into its NGA section 7 public interest determination and, consistent with its obligations under the APA, explained how it weighed them against other relevant factors in its public interest determination.
The manifold errors in the Certificate Order can and should be corrected by granting Sierra Club’s rehearing request and then developing a complete administrative record on project need, benefits, and environmental impacts. Based on that record, the Commission should then reconsider whether the Project is required by the public convenience and necessity and fully explain its decision in compliance with the APA.
For these reasons, I respectfully dissent.
[1] Transcon. Gas Pipe Line Co., 187 FERC ¶ 61,200 (2024) (Rehearing Order).
[2] Transcon. Gas Pipe Line Co., 186 FERC ¶ 61,047 (2024) (Certificate Order).
[3] Id. (Clements, Comm’r, dissenting at PP 2-7).
[4] Id. (Clements, Comm’r, dissenting at PP 8-9).
[5] 42 U.S.C. § 4321 et seq.
[6] See NGA § 7(e), 15 U.S.C. § 717f(e).
[7] 5 U.S.C. § 551 et seq.
[8] See Certificate Order, 186 FERC ¶ 61,047 (Clements, Comm’r, dissenting at P 5).
[9] As discussed below, infra P [5], the Commission made no serious effort to identify EOG’s customers. Consequently, the Commission not only neglected its NEPA obligations but also left itself in the dark as to the actual need for the Project and its potential public benefits.
[10] See Transco’s certificate application filed August 9, 2022 (Application), Resource Report 9 at 9-35 (“The natural gas for the Project may originate from existing production basins in southern and western Texas. . . . [T]here are no specific reserves or wells associated with the Project.” (emphasis added)); id. (“[T]he Project Shipper has not identified specific end-use markets to be indirectly served by the Project capacity.”). As I have previously explained, these questions are apparently answerable given Transco did have some specific information about EOG’s natural gas sources and its customers. See Certificate Order, 186 FERC ¶ 61,047 (Clements, Comm’r, dissenting at P 6 & n.15); see also Application, Resource Report 9 at 9-35 (“No additional natural gas production is required for or associated with the Project.”).
[11] Rehearing Order, 187 FERC ¶ 61,200 at P 22 & n.66.
[12] The majority misses the point in repeating that precedent agreements are evidence of project need. See Rehearing Order, 187 FERC ¶ 61,200 at P 22 & n.67. Precedent agreements are evidence of the shipper’s need for transportation capacity but have no bearing on whether market efficiency gains would be realized by delivering additional gas to a pooling point.
[13] The APA requires the Commission to provide a reasoned explanation of its decisions. See, e.g., SEC v. Chenery Corp., 318 U.S. 80, 94 (1943) (“[T]he orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained.”); Del. Riverkeeper Network v. FERC, 753 F.3d 1304, 1313 (D.C. Cir. 2014) (“[A]n agency action will be set aside as arbitrary and capricious if it is not the product of ‘reasoned decisionmaking.” (quoting Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983))) (Delaware Riverkeeper). The APA also requires the Commission to support its decision with substantial evidence, but there is zero evidence that the Project will enhance market efficiency. The Commission may not rely solely on economic theories or conclusory assertions to support its public interest determination. See, e.g., California Pub. Utils. Comm’n v. FERC, 20 F.4th 795, 802 (D.C. Cir. 2021) (vacating Commission order because it was not supported by substantial evidence); Emera Maine v. FERC, 854 F.3d 9, 30 (D.C. Cir. 2017) (remanding Commission ratemaking decision for failure to tie its rationale to record evidence); Nat’l Fuel Gas Supply Corp. v. FERC, 468 F.3d 831, 841 (D.C. Cir. 2006) (remanding Commission order for relying only on irrelevant examples and theoretical concerns); Williston Basin Interstate Pipeline Co. v. FERC, 358 F.3d 45, 50 (D.C. Cir. 2004) (remanding Commission order for relying on “general economic theory,” which does not constitute substantial evidence); Algonquin Gas Transmission Co. v. FERC, 948 F.2d 1305, 1313 (D.C. Cir. 1991) (demanding an analysis of benefits to justify a gas ratemaking decision rather than “unsupported assertion”); Elec. Consumers Res. Council v. FERC, 747 F.2d 1511, 1515 (D.C. Cir. 1984) (“the Commission's stated reasons for its approval [of marginal pricing component of electric rate design] are almost wholly conclusory.”).
[14] See Certification of New Interstate Nat. Gas Pipeline Facilities, 88 FERC ¶ 61,227, at 61,748 (1999), clarified, 90 FERC ¶ 61,128, further clarified, 92 FERC ¶ 61,094 (2000) (Certificate Policy Statement).
[15] Sierra Club Rehearing Request at 14.
[16] See NGA § 7(e), 15 U.S.C. § 717f(e) (emphasis added).
[17] The Rehearing Order apparently seeks to shift Transco’s and the Commission’s evidentiary burdens in stating that “Sierra Club offers no evidence or explanation for why the Commission’s finding [on market efficiency] is inaccurate.” Rehearing Order, 187 FERC ¶ 61,200 at P 22. To state the obvious, a petitioner for rehearing has no obligation to prove an unexplained and unsupported Commission finding is wrong. Instead, Transco was required, but failed, to “show [the] public benefits” of its proposal and support the claimed benefits with “relevant evidence.” See Certificate Policy Statement, 88 FERC ¶ 61,227 at 61,748. The Commission, in turn, was required to support its decision with substantial evidence.
[18] Certificate Order, 186 FERC ¶ 61,047 at P 52 & n.91; Rehearing Order, 187 FERC ¶ 61,200 at P 18.
[19] See EA at 87-88.
[20] EA at 87. The EA states that construction “would likely result in environmental impacts that would be either similar to or possibly greater than that of the proposed action.” Id. The EA does not identify what new construction would be required or how it concluded that the unidentified new construction would result in similar or greater environmental impacts. Reliance on such bare bone assertions is not reasoned decision-making. See Certificate Order, 186 FERC ¶ 61,047 at P 52; Rehearing Order, 187 FERC ¶ 61,200 at P 18.
[21] Under NEPA, an environmental assessment shall “briefly discuss . . . alternatives as required by § 102(2)(E) of NEPA, and the environmental impacts of the proposed action and alternatives.” 40 C.F.R. § 1501.5(c)(2) (2024). Stating that the Commission is relying on its staff’s “expert assessment” alone is insufficient. See Rehearing Order, 187 FERC ¶ 61,200, at P 18. The EA must include at least some discussion of staff’s analysis so the public has a meaningful opportunity to comment. Cf. Dep’t of Transp. v. Public Citizen, 541 U.S. 752, 768-69 (2004) (observing that for NEPA’s informational purpose to be served, an EIS must contain enough information to foster meaningful public comment on the agency decision-making process); Stand Up for California! v. Dep’t of Int., 994 F.3d 616, 629 (D.C. Cir. 2021) (“[p]ublication of an EIS . . . provides a springboard for public comment” (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349 (1989)). And the Commission must explain its own reasoning so the public can understand the basis for the Commission’s conclusions on alternatives. See, e.g., Baltimore Gas & Elec. Co. v. NRDC, 462 U.S. 87, 97 (1983) (explaining that NEPA requires that “the agency will inform the public that it has indeed considered environmental concerns in its decisionmaking process”).
[22] See Certificate Order, 186 FERC ¶ 61,047 at P 52.
[23] As I explained in my dissent from the Certificate Order, neither the EA nor the Order reflected any consideration of EOG’s ability to enter into a package of transportation agreements on two or more pipeline systems as an alternative to the Project. Certificate Order, 186 FERC ¶ 61,047 (Clements, Comm’r, dissenting at P 4 & n.9). The Certificate Order discounted that possibility based on an after-the-fact review of other pipelines’ electronic bulletin board postings, but these postings only show next-day capacity availability and reveal nothing about long-term availability. Id. Rather than acknowledging the irrelevance of the bulletin board postings, the Rehearing Order deflects by observing that the EA focuses on environmental impacts, not economic issues. See Rehearing Order, 187 FERC ¶ 61,200 at P 19. The relevant points, to which the Rehearing Order has no response, are (1) the Commission unjustifiably relied on the EA’s unsupported contention that no system alternatives were available in finding the Project was needed; and (2) the Commission’s resort to EBB postings in the Certificate Order was unavailing, as explained in both my dissent and Sierra Club’s Rehearing Request. Sierra Club Rehearing Request at 12-13.
[24] See Sierra Club Rehearing Request at 10-11, 22-24; Rehearing Order P 47.
[25] Birckhead v. FERC, 925 F.3d 510, 520 (D.C. Cir. 2019).
[26] Id. (quoting Barnes v. U.S. Dep’t of Transp, 655 F.3d 1124, 1136 (9th Cir. 2011)); see also Sierra Club Rehearing Request at 20-21; Del. Riverkeeper, 753 F.3d at 1304 (“[A]n agency must fulfill its duties to ‘the fullest extent possible[].’”) (quoting Scientists’ Inst. for Pub. Info., Inc. v. Atomic Energy Comm’n, 481 F.2d 1079, 1092 (D.C. Cir. 1973)).
[27] Rehearing Order 187 FERC ¶ 61,200 at P 49; Transco February 7, 2023 Response to Data Request at 2; see also Certificate Order, 186 FERC ¶ 61,047 at P 97 & n.157 (discussing the contents of the February 7 response).
[28] Application at 24-25 (“[P]otential markets for the natural gas supply to be transported through the Project capacity may include LNG export, power generation, and industrial natural gas consumption.”).
[29] Birckhead, 925 F.3d at 520. In Birckhead, the court chastised the Commission for declining to ask the project applicant for the relevant data. The lack of follow-up on Transco’s non-answer in this case mirrors the Commission’s failure to request additional data in Birckhead.
[30] Application at 11.
[31] Although the Certificate Policy Statement does not require any one type of evidence, it provides that the supporting information for a certificate “will usually include a market study.” Certification of New Interstate Nat. Gas Pipeline Facilities, 88 FERC ¶ 61,227, at 61,748 (1999).
[32] Application, Resource Report 9 at 9-35 (emphasis added).
[33] See Sierra Club Rehearing Request at 17-18, 24-28 (explaining that the SC-GHG Protocol is a “theoretical approach[] or research method[] generally accepted in the scientific community” and thus should be used in the NEPA analysis per 40 C.F.R. § 1502.21(c)). The Rehearing Order mischaracterizes Delaware Riverkeeper as holding that 40 C.F.R. § 1502.21(c) never applies to EAs. Rehearing Order, 187 FERC ¶ 61,200 at P 36. In fact, the court in Delaware Riverkeeper found only that § 1502.21(c) “[o]n its face” applies solely to EISs and the petitioner had not adequately explained how it would apply to an EA. Del. Riverkeeper, 45 F.4th at 112 (emphasis added). By contrast, in this case, Sierra Club explains that 40 C.F.R. § 1501.5(g) allows agencies to apply the provisions of § 1502.21(c) to EAs, not just EISs. Sierra Club Rehearing Request at 17. Sierra Club further explained that, under 40 C.F.R. § 1501.5(c), the Commission is required to determine if a project will have a significant environmental impact and must use all available tools to meet that obligation. Sierra Club Rehearing Request at 17-18. I agree that the Commission should have used the SC-GHG Protocol to meet its obligations.
[34] See Food & Water Watch v. FERC, Nos. 22-1214, 22-1315, 2024 WL 2983833, at *6 (D.C. Cir. Jun. 14, 2024) (East 300). Contrary to the majority’s claims, Rehearing Order, 187 FERC ¶ 61,200 at P 33, the D.C. Circuit found that attaching a “significant” or “insignificant” label to GHG emissions is not required “where the agency simply prepares the EIS,” but “[a] finding of no significant impact is . . . essential if an agency chooses not to prepare an EIS.” East 300, 2024 WL 2983833, at *6. A finding of no significant impact requires that “the agency determines, based on the environmental assessment, not to prepare an environmental impact statement because the proposed action will not have significant effects.” 40 C.F.R. § 1501.6(a) (2024) (emphasis added). Having failed to make that finding, the Commission did not “fulfill[] its obligations under NEPA through its discussion of the Project’s anticipated impacts in the EA.” Rehearing Order, 187 FERC ¶ 61,200 at P 33 & n.104.
[35] See Sierra Club Rehearing Request at 27-31.
[36] Transcon. Gas Pipe Line Co., 187 FERC ¶ 61,024 (2024) (Clements, Comm’r, dissenting at PP 9-17).
[37] The Rehearing Order appears to suggest that the Commission’s NEPA analysis is divorced from the Commission’s obligations under the NGA. See Rehearing Order, 187 FERC ¶ 61,200 at P 32 (“[The Commission’s NGA analysis] is informed by but differs from the required analysis under NEPA.”). To the contrary, as I have repeatedly explained, the Commission’s obligations under the two statutes are inextricably linked, and NEPA gives content to the NGA’s public interest standard. See, e.g., Transcon. Gas Pipe Line Co., 187 FERC ¶ 61,024 (Clements, Comm’r, dissenting at P 4); Transcon. Gas Pipe Line Co., 182 FERC ¶ 61,148 (2023) (Clements, Comm’r, dissenting at P 7).
[38] See Vecinos Para el Bienstar de la Comunidad Costera v. FERC, 6 F.4th 1321, 1329, 1331 (D.C. Cir. 2021) (finding the Commission’s analysis of climate change impacts deficient and directing the Commission to revisit its NEPA analysis and NGA public interest determination after correcting deficiencies); see also Del. Riverkeeper, 45 F.4th at 115 (finding the Commission’s NGA section 7 balancing of public benefits and adverse consequences reasonably accounted for potential environmental impacts” and noting that in some circumstances GHG emissions are a reasonably foreseeable effect of a pipeline project that must be studied under NEPA); Food & Water Watch v. FERC, 28 F.4th 277, 282 (D.C. Cir. 2022) (recognizing the NGA section 7 certificate process incorporates environmental review under NEPA, which includes analysis of downstream GHG emissions.); Birckhead, 925 F.3d at 518-19 (affirming previous holdings that the Commission is the “legally relevant cause of the direct and indirect environmental effects of pipelines it approves,” including reasonably foreseeable GHG emissions (cleaned up)); Sierra Club v. FERC, 867 F.3d 1357, 1373 (D.C. Cir. 2017) (addressing Commission’s treatment of GHG emissions and explaining that the Commission’s public convenience and necessity determination must weigh a project’s environmental effects).
[39] See CEQ, NEPA Guidance on Consideration of Greenhouse Gas Emissions and Climate Change, 88 Fed. Reg. 1196, 1202 (Jan. 9, 2023) (“In most instances . . . [agencies] should apply the best available estimates of the SC-GHG to the incremental metric tons of each individual type of GHG emissions [in their NEPA analyses]. . .”); see also Mont. Env’t Info. Ctr. v. U.S. Off. of Surface Mining, 274 F. Supp. 3d 1074, 1099 (D. Mont. 2017) (finding the Office of Surface Mining needed to consider the SC-GHG Protocol in a NEPA analysis); High Country Conservation Advocs. v. U.S. Forest Serv., 52 F. Supp. 3d 1174, 1193 (D. Colo. 2014) (rejecting an EIS as deficient for not using the SC-GHG Protocol to assess climate impacts).
[40] Both the Certificate Order and the Rehearing Order state that the SC-GHG values are provided merely for “informational purposes.” Certificate Order, 186 FERC ¶ 61,047 at P 104; Rehearing Order, 187 FERC ¶ 61,200 at P 30. While NEPA does not mandate that agencies achieve particular substantive environmental results, it does require agencies to consider the environmental impacts of projects and their alternatives to ensure “fully informed and well-considered decision[s].” Vt. Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 558 (1978); see also, e.g., Del. Riverkeeper, 753 F.3d at 1310. The Commission’s approach erodes NEPA’s purpose, treating it as solely a public disclosure requirement and ignoring its important role in informing agency decision-making.