Docket No. CP17-40-006
I concur with the decision to reissue a certificate of public convenience and necessity to Spire STL Pipeline LLC (Spire) for its already constructed pipeline primarily because approximately 650,000 retail natural gas customers in the St. Louis area depend on the pipeline’s continued operation. The record shows that various developments over the four years since the Commission issued a certificate to Spire have left Spire’s affiliated local distribution company, Spire Missouri, and its captive customers with no plausible alternative source of upstream gas transportation service.[1] I have concluded that this demonstrated need for, and other benefits of, continued operation of the Spire STL Pipeline outweigh its adverse impacts. I write separately to highlight key lessons this case teaches about how the Commission should evaluate future certificate applications predicated solely on affiliate precedent agreements.
The Spire STL Pipeline story is not a pretty one. The Commission issued a certificate to Spire in August 2018, relying almost exclusively on Spire’s single precedent agreement with its affiliate Spire Missouri to find the pipeline was needed, notwithstanding credible allegations of self-dealing and evidence the pipeline was not needed.[2] Commissioners Glick and LaFleur issued strong dissents, persuasively explaining why the record did not support either of the two findings the Commission’s 1999 Certificate Policy Statement[3] calls on it to make: first, that the pipeline is needed, and second, on balance, the pipeline's potential benefits outweigh its potential adverse impacts.[4] On rehearing, a majority of the Commission reaffirmed the Certificate Order, insisting it “is not required to look behind precedent agreements to evaluate project need, regardless of the affiliate status of the project shipper.”[5] That myopic approach paved the way to the 2021 decision of the D.C. Circuit Court of Appeals vacating the Certificate Order.[6] By then, the pipeline was already operational and Spire Missouri had made various changes leaving it with no practical alternative upstream supplier. The D.C. Circuit recognized the “disruption” vacatur could cause, but nevertheless ordered vacatur because merely remanding would incentivize the Commission “to allow ‘build[ing] first and conduct[ing] comprehensive reviews later.’”[7] To assure continuity of vital natural gas service to retail customers in the St. Louis area, the Commission took extraordinary steps to temporarily authorize the pipeline’s continued operation.[8]
The Commission should never go on such a perilous ride again. The D.C. Circuit’s 2021 decision tells us how to avoid it. The most basic lesson the decision teaches is that the Commission should follow its own Certificate Policy Statement. As the court explained, although precedent agreements generally are important evidence of need, “nothing in the Certificate Policy Statement suggests that a precedent agreement is conclusive proof of need” in the circumstances presented in this case.[9] To the contrary, the policy provides for consideration of other evidence, including market studies, and that is particularly important in the affiliate context.[10] Notably, Spire submitted a market study in support of its application for reissuance of the certificate.[11] As explained in today’s Order, we have considered the market study and other record evidence of need in reissuing Spire’s certificate.[12]
Another important lesson is that the Commission must fully engage with arguments and evidence credibly challenging the probative value of a precedent agreement.[13] The court found that the Commission’s failure to do so in the Certificate Order was not “reasoned decisionmaking,” but instead an “ostrich-like approach [that] flies in the face of the guidelines set forth in the Certificate Policy Statement.”[14] Although it may be simple and expedient to look only at precedent agreements and ignore other record evidence, that shortcut came at very high cost to all parties in this case, including Spire.
I offer a final observation. The Commission’s duty under the Natural Gas Act to serve the public interest does not end with today’s Order. In particular, we must be vigilant in ensuring Spire fully satisfies its obligations under its certificate to restore the pipeline right-of-way. The Spire STL Pipeline has been in service for over three years, yet additional restoration work remains.[15] The Commission must show through rigorous oversight – and imposition of any necessary corrective measures – that it does indeed take landowner impacts seriously.[16] Finally, the Commission is responsible for assuring that Spire’s rates are just and reasonable. The cost and revenue study that Spire is required to submit in February 2023[17] warrants close scrutiny, which I am confident our expert staff will provide.
For these reasons, I respectfully concur.
[1] See Spire STL Pipeline LLC, 181 FERC ¶ 61,232, at P 34 (2022) (Order).
[2] See Spire STL Pipeline LLC, 164 FERC ¶ 61,058, at PP 72-87 (2018) (Certificate Order); on reh’g 169 FERC ¶ 61,134 (2019) (Rehearing Order).
[3] Certification of New Interstate Natural Gas Pipeline Facilities, 88 FERC ¶ 61,227 (1999), clarified, 90 FERC ¶ 61,128, further clarified, 92 FERC ¶ 61,094 (2000) (Certificate Policy Statement).
[4] Certificate Order, 164 FERC ¶ 61,058 (Glick, Comm’r, dissenting; LaFleur, Comm’r, dissenting).
[5] Rehearing Order, 169 FERC ¶ 61,134 at P 14.
[6] Envtl. Def. Fund v. FERC, 2 F.4th 953 (D.C. Cir. 2021).
[7] Id. at 976 (quoting Standing Rock Sioux Tribe v. Army Corps of Eng’rs, 985 F.3d 1032, 1052 (D.C. Cir. 2021)).
[8] See Order at PP 12-14.
[9] 2 F.4th at 973 (explaining in this case there was no new load demand, no Commission finding the pipeline would reduce costs, only a single precedent agreement between affiliates, the affiliate agreement was for less than full capacity, and no shipper subscribed during the open season).
[10] Id. at 972.
[11] See Order at P 33.
[12] See Order at PP 24-39.
[13] 2 F.4th at 973.
[14] Id. at 975.
[15] See, e.g., Commission Staff Nov. 17, 2022 Inspection Report at 7, accession no. 20221117-3059.
[16] See Order at P 47.
[17] See Order at P 54.