Docket No. CP21-94-001
I concur with the result of today’s Order,[1] but write separately to highlight two aspects of the Order that are deeply troubling. First, in affirming the underlying certificate order’s finding that Transco’s REAE Project is needed, the Order relies on an incomplete record and the Commission’s own speculation about certain key facts underpinning the competing market studies filed in the docket. These deficiencies prompt me to renew my call for the Commission to update the 1999 Certificate Policy Statement[2] and our certificate application review procedures to ensure we fully evaluate all the important factors bearing on the need for each proposed new gas infrastructure project.[3] Second, in discussing whether the Commission is obligated to consider the environmental impacts of upstream greenhouse gas (GHG) emissions in its determination of the public convenience and necessity under section 7 of the Natural Gas Act (NGA),[4] the Order includes a cryptic reference to the jurisdictional limitations in section 1(b) of the NGA.[5] The Order does not explain what this language is intended to mean. For the reasons explained below, the language cannot lawfully be construed to mean the Commission lacks authority to consider upstream GHG emissions in its determination of the public convenience and necessity.
As I said in my concurrence with the Certificate Order, reliability is always a key concern for the Commission,[6] and I take the reliability issues in this case very seriously. Here, however, there are conflicting market studies reaching vastly different conclusions about whether new interstate pipeline capacity is needed now or will be in the future to serve New Jersey local distribution companies (LDCs). The New Jersey Board of Public Utilities (NJ BPU), the governmental entity responsible for assuring that LDCs in New Jersey provide reliable service, contests the need for new pipeline capacity based on an independent market study it commissioned (the NJ Agencies Study). That record evidence deserves thorough review in our need determination, as does the other record evidence pertaining to need. Unfortunately, because the Commission limited its consideration to the paper record the parties created, there are key gaps in our understanding of the conflicting market studies, and therefore of the need issue overall. To fill those gaps, this Order, like the Certificate Order, relies too heavily on unsupported assumptions and speculation.
A few examples show that the Commission’s consideration of the need issue remains long on conjecture and short on facts. For instance, the Commission rejects the NJ Agencies Study’s conclusions on the critical issue of demand growth because building electrification “might” transfer demand from the LDCs to natural gas-fired generators.[7] Yet, the Commission has performed no analysis of the magnitude of this assumed transfer in demand, nor has it asked the parties to provide it. In another example, the Commission criticizes the NJ Agencies study based on its “key assumption” that off-system peaking resources will remain constant at 619 MDth/d.[8] The Commission observes that the availability of these resources is “uncertain.”[9] However, the reasons the Commission gives for the uncertainty would have been true during past severe weather events, not just future ones; the Commission offers no explanation for why the identified uncertainties are relevant only to the future availability of off-system peaking resources. The only factual basis the Commission cites for its criticism relating to off-system peaking resources is that one NJ LDC projected its use of off-system peaking resources would decline to zero after 2022.[10] However, the Commission does not know why the LDC made that projection because it has not asked the parties to supply the answer. It is entirely possible that the LDC did not believe it would need the off-system peaking resources, in which case its “projection” could undercut the need case for the REAE Project.
Despite the shortcomings in the Commission’s need analysis, that the Commission in this proceeding considered need-related record evidence at all (beyond the existence of precedent agreements) is a step forward because it heeds our 1999 Certificate Policy Statement. Our compliance with the 1999 Certificate Policy Statement is what enabled me to concur in the Certificate Order, as well as this Order, with respect to the need issue. But, as I have said before, we can and must do better in assessing the increasingly complex factors bearing on the need for new pipeline capacity, including the effect of relevant state laws, programs, and utility regulatory agency determinations.[11]
As reflected in Commissioner Danly’s concurring statement, the cryptic reference to section 1(b) of the Natural Gas Act in paragraph 101 of the Order could be misinterpreted to suggest that the jurisdictional limitations in section 1(b) categorically prevent the Commission from considering upstream GHG emissions in its public convenience and necessity determinations under section 7 of the NGA.[12] But the language cannot lawfully be construed to mean that. The D.C. Circuit Court of Appeals has twice held that the Commission not only may consider indirect GHG emissions under section 7, but that it may deny a certificate application altogether on environmental grounds. The Court first reached this conclusion in Sabal Trail in 2017[13]; a different three-judge panel unanimously reaffirmed it two years later in Birckhead.[14] Contrary to Commissioner Danly’s contention, this Commission is bound to follow these controlling precedents.[15] For the Commission to assert a legal theory that the D.C. Circuit has twice rejected (and no other Circuit Court has ever adopted) would be pure obstinacy. As the D.C. Circuit stated in Atlantic City Electric v. FERC: “If FERC thinks [the court is] wrong, then like any other litigant, it may petition for certiorari to the Supreme Court of the United States. Absent such a petition and the issuance of certiorari, in an order by the Supreme Court, FERC is bound by our decision.”[16]
I am able to concur in the GHG aspect of the Order only because the reference to section 1(b) of the NGA in paragraph 101 is meaningless. If the language were construed to cast any doubt on the Commission’s authority or responsibility to consider upstream or downstream GHG emissions under either the NGA or NEPA, then my concurrence should be construed as a dissent with respect to this aspect of the Order. As Chairman Phillips’ concurrence suggests,[17] the Commission did not need to include the language in paragraph 101 in responding to Riverkeepers’ argument on rehearing. In reading the three separate statements that language has sparked, stakeholders might reasonably question why the Commission wandered onto this sidetrack, particularly in a time-sensitive matter. If only to satisfy the Administrative Procedure Act’s requirement for reasoned decision-making,[18] the Commission should eschew including extraneous language like this in future orders.
Finally, it is important to clarify the Commission’s obligations under the NGA and NEPA given Commissioner Danly’s suggestion that our consideration of the public convenience and necessity under section 7 of the NGA is divorced from our responsibilities under NEPA.[19] Nearly fifty years ago the Supreme Court found that environmental considerations are included in the Commission’s determination of the public convenience and necessity under section 7 of the NGA.[20] NEPA prescribes the procedural mechanisms for how the Commission must factor environmental concerns into its decision-making. The statute requires all agencies, including this one, to take a “hard look” at the potential environmental consequences of their proposed actions in deciding what action to take.[21] Our obligations under NEPA are thus inextricably linked to our obligation to consider environmental impacts, including upstream and downstream GHG emissions, in our decisions under section 7 of the NGA.[22] The unnecessary language in paragraph 101 of this Order cannot be construed to stand in the way of the Commission meeting those linked statutory obligations.
For the foregoing reasons, I respectfully concur in part.
[1] Transcon. Gas Pipe Line Co., LLC, 182 FERC ¶ 61,148 (2023) (Order).
[2] Certification of New Interstate Nat. Gas Pipeline Facilities, 88 FERC ¶ 61,227, corrected, 89 FERC ¶ 61,040 (1999), clarified, 90 FERC ¶ 61,128, further clarified, 92 FERC ¶ 61,094 (2000) (1999 Certificate Policy Statement).
[3] See Transcon. Gas Pipe Line Co., LLC, 182 FERC ¶ 61,006 (2023) (Certificate Order) (Clements, Comm’r, concurring, at PP 1, 8).
[4] 15 U.S.C. § 717f.
[5] 15 U.S.C. § 717(b); see Order at P 101 (“The text of the NGA makes clear that upstream activities such as exploration, production and gathering are not under the Commission’s jurisdiction, and courts have upheld our determinations that we do not need to consider upstream emissions Riverkeeper suggests.”).
[6] Certificate Order (Clements, Comm’r, concurring at P 5).
[7] Order at P 37.
[8] Id. at P 38.
[9] Id.
[10] Order at P 38 n.126.
[11] See Certificate Order (Clements, Comm’r, concurring at PP 1, 4, 8).
[12] Order (Danly, Comm’r, concurring at P 4).
[13] Sierra Club v. FERC, 867 F.3d 1357, 1373 (D.C. Cir. 2017) (Sabal Trail).
[14] Birckhead v. FERC, 925 F.3d 510, 519 (D.C. Cir. 2019) (per curiam) (Birckhead). See also Henry v. FPC, 513 F.2d 395, 403 (D.C. Cir. 1975) (explaining that the U.S. Supreme Court holds that the Commission’s consideration of factors bearing on the public interest in section 7 proceedings “specifically extends to matters that are excluded from the direct regulatory jurisdiction of the Commission”) (citing FPC v. Transcon. Gas Pipe Line Corp., 365 U.S. 1 (1961). That Sabal Trail and Birckhead involved “downstream” indirect GHG emissions—i.e., emissions from the end-user’s burning the natural gas supplied by the Commission-jurisdictional pipeline—is an unimportant distinction for present purposes because, under section 1(b), the Commission has no jurisdiction over those end-users, just as it has no jurisdiction over upstream natural gas producers. Nor does it matter that the two cases dealt with the Commission’s obligations under the National Environmental Policy Act (NEPA). The court’s construction of the Commission’s authority under section 7 was necessary to its determination that the Commission was the legally relevant cause of the downstream emissions under NEPA.
[15] Commissioner Danly proposes that the Commission “declare that we will not consider induced upstream production or its effects as part of our public convenience and necessity determination.” Order (Danly, Comm’r, concurring at P 4). He suggests this is permissible pursuant to Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 982-83 (2005). But far from the factual circumstances of Brand X, where the agency adopted a reasonable interpretation of the relevant statute which had never before been reviewed in court, Commissioner Danly suggests the Commission adopt a statutory interpretation that was rejected in Birckhead. There, the court rejected the Commission’s argument that lack of jurisdiction over the emitting downstream entities broke the causal chain and held that the Commission’s approval of a proposed jurisdictional project can be considered the legally relevant cause of the downstream GHG emissions “[b]ecause the Commission may . . . ‘deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment.’” 925 F.3d at 519 (quoting Sabal Trail, 867 F.3d at 1373). If the Commission had no authority to consider greenhouse gas emissions in its public convenience and necessity determination under the NGA, as Commissioner Danly suggests, then the court could not possibly have reached its conclusion. See id. (“Although it is true that ‘[a]n agency has no obligation to gather or consider environmental information if it has no statutory authority to act on that information,’ in the pipeline certification context the Commission does have statutory authority to act.”) (alteration and emphasis in original) (quoting Sabal Trail, 867 F.3d at 1372).
[16] Atlantic City Elec. Co. v. FERC, 329 F.3d 856, 859 (D.C. Cir. 2003).
[17] Order (Phillips, Chairman, concurring at P 1).
[18] Del. Riverkeeper Network v. FERC, 753 F.3d 1304, 1313 (D.C. Cir. 2014) (quoting Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)) (“[A]n agency action will be set aside as arbitrary and capricious if it is not the product of ‘reasoned decisionmaking.’”).
[19] See Order (Danly, Comm’r, concurring at PP 3, 4).
[20] NAACP v. FPC, 425 U.S. 662, 670 n.6 (1976).
[21] See, e.g., Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989) (“The sweeping policy goals announced in § 101 of NEPA . . . require that agencies take a “hard look” at environmental consequences.”) (internal quotations omitted) (quoting Kleppe v. Sierra Club, 437 U.S. 390, 410 n.21 (1976)).
[22] Indeed, NEPA may give content to a broad statutory “public interest” standard like that in NGA section 7, permitting the agency to reflect environmental considerations in its actions. See Village of Barrington v. Surface Transp. Bd., 636 F.3d 650, 665-66 (D.C. Cir. 2011).