Docket Nos. CP22-502-000, CP22-503-000
I dissent from the Rehearing Order for two reasons. First, I dissent from the discussion in paragraphs 29 and 30 contending the Commission is unable to assess the significance of the impacts of greenhouse gas (GHG) emissions.[1] I do so for the reasons I dissented from this same language in the Certificate Order authorizing the Commonwealth Energy Connector (CEC) Project and Virginia Reliability Project (VRP) (together, Projects).[2] More fundamentally, however, I dissent from the Rehearing Order because I agree with the Sierra Club and Chesapeake Action Network (collectively, Sierra Club) that the Commission is required to meaningfully assess and weigh the effects of a proposed project’s GHG emissions, and the Commission’s failure to do so here violated the Natural Gas Act (NGA), the National Environmental Policy Act (NEPA), and the Administrative Procedure Act (APA).[3] As explained below, the Commission should have (a) used the Social Cost of Greenhouse Gas protocol (SC-GHG Protocol) to assess the significance of the Projects’ GHG emissions in its NEPA analysis, (b) factored the SC-GHG Protocol’s monetized values into its public interest determination under section 7 of the NGA,[4] and (c) fully explained in the Certificate Order how it did so.
At the outset, it is helpful to be clear about what the Commission’s legal obligations are under the NGA, NEPA, and the APA with respect to the consideration of a proposed project’s GHG emissions. A number of cases have recognized that the Commission must consider the impacts of proposed project’s GHG emissions in determining the “public convenience and necessity” under the NGA.[5] Those cases are consistent with the many precedents holding that environmental impacts are relevant to the Commission’s public interest determinations under the statute.[6] Indeed, more than sixty years ago, the Supreme Court held that our predecessor, the Federal Power Commission, properly factored air pollution impacts into its public interest determination under section 7.[7] Nearly fifty years ago, in NAACP, the Supreme Court held that environmental protection is one purpose of the NGA.[8] Over twenty years ago, courts continued to recognize that the NGA public interest determination involves weighing “market support, economic, operational, and competitive benefits, and environmental impact[s].”[9]
The Commission’s 1999 Certificate Policy Statement[10] also calls on the Commission to weigh environmental impacts in its NGA section 7 public interest determinations. The policy explains that, in making its public interest determination, “the Commission’s goal is to appropriately consider the enhancement of competitive transportation alternatives, the possibility of overbuilding, the avoidance of unnecessary disruption of the environment, and the unneeded exercise of eminent domain.”[11] The policy provides for the Commission to weigh project benefits against adverse consequences, including adverse environmental impacts.[12]
NEPA also requires the Commission to consider climate and other environmental impacts in deciding whether to approve a project application. As the Supreme Court has explained, NEPA’s environmental impact statement (EIS) requirement “ensures that the agency, in reaching its decision, will have available, and will carefully consider, detailed information concerning significant environmental impacts. . . .”[13] The Commission’s obligations under the NGA and NEPA are inextricably linked. NEPA directs federal agencies “to the fullest extent possible” to interpret and administer their organic statutes in accordance with the environmental protection objectives set forth in NEPA.[14] In requiring the Commission to consider environmental impacts in its substantive decision-making, NEPA gives content to the NGA’s broad “public interest” standard.[15]
Of course, it is not enough for the Commission to consider GHG impacts in its decision-making. The APA requires the Commission to provide a reasoned explanation of how it factored the GHG impacts into its section 7 determination.[16]
Although I concurred in part with the Certificate Order, I am persuaded by the Rehearing Request that the Commission’s NEPA review of the Projects’ GHG emissions, as well as the Commission’s resulting NGA section 7 determination, were legally deficient.[17] The Certificate Order did not and could not meaningfully explain how the Commission factored the Projects’ GHG emissions into its decision, as the APA required it to do, because the Commission failed its duties under NEPA and the NGA to assess and weigh the significance of those emissions.[18]
The Commission’s legal errors begin with its deficient NEPA analysis. NEPA regulations and case law require the Commission to assess the significance of GHG-related environmental impacts. As Sierra Club correctly observes, the Council on Environmental Quality’s (CEQ) regulations expressly state that an EIS must discuss “[t]he environmental impacts of the proposed action and reasonable alternatives to the proposed action and the significance of those impacts.”[19] The D.C. Circuit Court of Appeals has held that the cited CEQ regulation requires an EIS to include discussion of the significance of the impacts caused by a project’s reasonably foreseeable GHG emissions.[20] The EIS for the Projects,[21] and later the Certificate Order,[22] violated this regulation by failing to assess the significance of the Projects’ GHG emissions.
The Commission cannot excuse its non-compliance by claiming, as it does here, that there are no “accepted tools or methods for the Commission to use to determine significance.”[23] That statement contradicts the Commission’s own precedent. In N. Nat. Gas Co., the Commission found that it can determine the significance of GHG-related impacts by applying its “experience, judgment, and expertise,” just as it does for other types of environmental impacts.[24] Citing Supreme Court precedent, the Commission explained that the significance determination furthers NEPA’s purposes by “disclosing to the public and the relevant decisionmakers the extent of a project’s adverse environmental impacts.”[25]
I agree with Sierra Club that the Commission could have and should have used the SC-GHG Protocol to assess significance.[26] Instead, the Commission relies on the same arguments it made nearly a decade ago for rejecting the protocol.[27] To be sure, in 2016 the D.C. Circuit Court of Appeals accepted those reasons with a one-paragraph explanation in EarthReports.[28] A handful of later decisions relied on EarthReports in reaffirming the Commission’s rationale.[29] The Commission later developed two additional arguments for rejecting use of the SC-GHG Protocol, asserting that the protocol is not appropriate for “project-level” environmental analysis,[30] and that its monetized values lack context because the Commission does not monetize other project costs or benefits.[31] Because the bases for the decisions in EarthReports and cases relying on it are undercut by subsequent scientific developments, they have less precedential value. Similarly, Commission decisions relying on outdated reasoning and ignoring recent relevant scientific developments deserve little or no judicial deference. No Commission or court decision has considered important recent developments supporting use of the SC-GHGs Protocol for assessing the significance of GHG emissions from proposed natural gas infrastructure projects.
One key recent development is CEQ’s issuance of new guidance in late 2023 addressing the consideration of GHG emissions under NEPA.[32] The Commission should heed that guidance because CEQ is the agency Congress entrusted with responsibility for guiding NEPA implementation.[33] CEQ’s new guidance recommends that agencies use the SC-GHG Protocol in NEPA reviews, stating that “[i]n 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. . . .”[34] The guidance makes no distinction between “project-level” reviews and other NEPA reviews. As I have previously explained, this new guidance (along with CEQ’s 2016 guidance on GHGs[35]) indicates CEQ would construe its regulation on applying generally accepted scientific methods in NEPA analyses (40 C.F.R. § 1502.21(c)) to require use of the SC-GHG Protocol to assess significance.[36]
In the last decade, the SC-GHG Protocol has become well-accepted as a method to contextualize and monetize climate harms for a range of agency actions. On January 20, 2021, President Biden issued an executive order establishing the Interagency Working Group on Social Cost of Greenhouse Gases (IWG) and directing it to publish both interim and final SC-GHG values for use in agency decision-making.[37] The Executive Order explained that the SC-GHG values are “essential for agencies to accurately determine the social benefits of reducing greenhouse gas emissions when conducting cost-benefit analyses of regulatory and other actions.”[38] The protocol has been endorsed by experts[39] and policymakers alike.[40] The IWG,[41] CEQ,[42] and courts[43] agree the protocol is appropriate for assessing GHG impacts in NEPA reviews. By translating GHG emissions impacts into monetary values, the protocol makes the impacts of GHG emissions more understandable both for the public and agency decision-makers.[44]
None of the Commission’s reasons for rejecting the SC-GHG Protocol withstand scrutiny. The Commission has asserted that if the SC-GHG Protocol does not measure incremental physical impacts on the environment, it is not useful for determining an individual project’s impacts, nor is it useful for determining the project’s contribution to cumulative impacts of climate change.[45] These contentions misapprehend the science and modeling underlying the protocol. The SC-GHG Protocol is designed to measure the marginal cost of each new ton of emissions, and therefore reflects the incremental impact of a project’s emissions.[46] Moreover, the models underlying the SC-GHG calculate some (but not all) of the physical impacts of GHG emissions. For example, the DICE 2010 model, one of the three integrated assessment models used for the IWG’s SC-GHG interim values, includes a sea level rise module. This module models expansion of the oceans, melting of glaciers and small ice caps, melting of the Greenland ice sheet, and melting of the Antarctic ice sheet based on the modeled marginal increase in temperature caused by GHG emissions.[47] Likewise, the FUND model, which is also used for the IWG’s interim SC-GHG values, models the incremental impacts of GHG emissions on human health, as well as global agricultural productivity.[48] Given these facts, it is difficult to understand how the Commission can continue to rely on its 2015 finding that the SC-GHG Protocol cannot be used to determine a project’s incremental physical impacts. Indeed, the Commission sometimes has recognized that the protocol does incorporate the incremental physical impacts of GHG emissions.[49]
The science supporting the SC-GHG protocol continues to develop and has become more robust. In December 2023, the IWG issued a memorandum explaining that “there have been a variety of developments in the scientific literature” since the IWG published its interim SC-GHG estimates.[50] The IWG encouraged agencies to use their professional judgment to determine which estimates reflect “the best available evidence, are most appropriate for particular analytical contexts, and best facilitate sound decision-making.”[51] The United States Environmental Protection Agency (EPA) recently issued revised SC-GHG values after an extensive, peer-reviewed process to reflect the National Academy of Science’s (NAS) recommendations to improve the SC-GHG Protocol.[52] EPA’s updated protocol incorporates more recent scientific research on the physical environmental impacts of GHG emissions,[53] a fact the Commission should recognize in determining the protocol’s suitability for the Commission’s use.
The Commission’s argument in 2015 that a lack of consensus on discount rates justifies rejecting the SC-GHG protocol is also meritless. This argument was based on an outdated EPA “Fact Sheet” that no longer reflects that agency’s expert opinion.[54] EPA’s current view is that a dynamic discount rate may be employed in the SC-GHG calculation, using a “descriptive approach for selecting specific discount rates based on observed preferences for temporal tradeoffs of consumption.”[55]
The Commission has also sometimes criticized the “significant variation” in the SC-GHGs values based on which discount rate is used.[56] But that is largely the result of the Commission’s own choice to continue using outdated discount rates (2.5%, 3%, and 5%) in calculating SC-GHG values for “informational purposes.” The IWG is clear that “the understanding of discounting approaches suggests discount rates appropriate for intergenerational analysis in the context of climate change that are lower than 3 percent.”[57] Moreover, EPA’s recent update of the SC-GHG Protocol (again based on the NAS’s recommendations and drawing on input from expert economists) incorporates near-term discount rates of 1.5%, 2%, and 2.5%.[58] Here, using the 3% and 2.5% discount rates, the Projects’ calculated SC-GHG values ranged between about $2 billion to $3 billion.[59] Even at the unrealistically high 5% discount rate, the Projects would cause more than $500 million in damages.[60] Under any rational standard for measuring “significance,” every one of these amounts would be deemed significant. The fact that the actual cost could fall at any point within the range of $500 million to $3 billion makes no difference for the Commission’s characterization and assessment of the project’s GHG emissions.[61]
Nor is the Commission’s assertion that “there are no criteria to identify what monetized values are significant for NEPA purposes”[62] a valid reason to reject the SC-GHG protocol. The Commission nowhere explains why it needs some external standard to determine the significance of these “monetized values.” As an economic regulator, the Commission is well-positioned to make that determination itself. Indeed, the Commission’s ability to do so is evinced by the Commission’s reliance on EIS findings that characterize the significance of proposed projects’ claimed benefits.[63] Of course, I have long advocated that the Commission address in a generic proceeding what level of impact from GHG emissions is “significant.”[64] Again, however, under any standard the Commission might adopt, the minimum of $500 million in damage the Projects would cause would surely be deemed significant. And it is orders of magnitude higher than the amount of tax benefits the Commission has deemed “significant” for other projects.[65]
Finally, the fact the Commission does not generally monetize other costs and benefits does not render the SC-GHG Protocol unsuitable for assessing GHG emissions. CEQ is clear that “[t]he SC–GHG provides an appropriate and valuable metric. . . even if no other costs or benefits are monetized.”[66] To be sure, the SC-GHG values would be even more useful to the Commission if we conducted a real cost-benefit analysis for NGA section 7 project applications because we could then compare the monetized benefits of a project to its monetized adverse impacts.[67] But unless and until the Commission determines a better mechanism to assess the significance of GHGs, the Commission must use any “theoretical approach[],” including the SC-GHG Protocol, “generally accepted in the scientific community” to help us reach such a significance determination.[68] The SC-GHG Protocol, as demonstrated above, fits that description.
For the foregoing reasons, the Commission should have used the SC-GHG Protocol to determine the significance of the Projects’ GHG emissions, rather than just reciting the SC-GHG values for “informational purposes.” The Commission should have then considered the Projects’ SC-GHG values in its NGA section 7 determination and explained in the Certificate Order how it weighed those values against the Projects’ benefits. The Commission’s failure to do so violated NEPA, the NGA, and the APA. Consequently, I would grant Sierra Club’s request for rehearing and revisit the Commission’s NGA section 7 public interest determination.
For these reasons, I respectfully dissent.
[2] See Transcon. Gas Pipe Line Co., 185 FERC ¶ 61,130 (2023) (Certificate Order) (Clements, Comm’r, dissenting in part at PP 2-3). Specifically, I dissented from the “Driftwood compromise” language in the Certificate Order because (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[2] addressing methods for doing so; and (2) the language departs from previous Commission precedent without reasoned explanation, thereby violating the Administrative Procedure Act. That same formulaic language appears in paragraphs 29, 30, and 33 of the Rehearing Order. In my concurrence in Transcon. Gas Pipe Line Co., 184 FERC ¶ 61,066 (2023) (Clements, Comm’r, concurring, at PP 2-3), I explained the history of the language, which the majority suddenly adopted in Driftwood Pipeline LLC, 183 FERC ¶ 61,049, at PP 61, 63 (2023) (Driftwood). I dissented from this language in Driftwood and every subsequent order in which it has appeared. See Driftwood, 183 FERC ¶ 61,049 (Clements, Comm’r, dissenting in part at PP 2-3 & n.5); see also Gas Transmission Nw., LLC, 187 FERC ¶ 61,023 (2024) (Clements, Comm’r, dissenting at P 28); E. Tenn. Nat. Gas, LLC, 186 FERC ¶ 61,210 (2024) (Clements, Comm’r, dissenting in part at PP 2-3); Transcon. Gas Pipe Line Co., 186 FERC ¶ 61,209 (2024) (Clements, Comm’r, dissenting in part at PP 2-3); N. Nat. Gas Co., 186 FERC ¶ 61,064 (2024) (Clements, Comm’r, dissenting in part at PP 2-3); Saguaro Connector Pipeline, LLC, 186 FERC ¶ 61,114 (2024) (Clements, Comm’r, dissenting in part at PP 2-4); Tenn. Gas Pipeline Co., 186 FERC ¶ 61,113 (2024) (Clements, Comm’r, dissenting in part at PP 2-3); Transcon. Gas Pipe Line Co., 186 FERC ¶ 61,063 (2024) (Clements, Comm’r, dissenting in part at PP 2-3); Columbia Gas Transmission, LLC, 186 FERC ¶ 61,048 (2024) (Clements, Comm’r, dissenting in part at PP 2-4); Transcon. Gas Pipe Line Co., 186 FERC ¶ 61,047 (2024) (Clements, Comm’r, dissenting at PP 8-9); Tenn. Gas Pipeline Co., 186 FERC ¶ 61,046 (2024) (Clements, Comm’r, dissenting in part at PP 1-2); ANR Pipeline Co., 185 FERC ¶ 61,191 (2023) (Clements, Comm’r, dissenting in part at PP 2-3); Transcon. Gas Pipe Line Co., 185 FERC ¶ 61,133 (2023) (Clements, Comm’r, dissenting in part at PP 2-4); Transcon. Gas Pipe Line Co., 185 FERC ¶ 61,130 (2023) (Clements, Comm’r, dissenting in part at PP 2-3); Tex. LNG Brownsville LLC, 185 FERC ¶ 61,079 (2023) (Clements, Comm’r, dissenting at PP 9-10); Rio Grande LNG, LLC, 185 FERC ¶ 61,080 (2023) (Clements, Comm’r, dissenting at PP 9-10); Gas Transmission Nw., LLC, 185 FERC ¶ 61,035 (2023) (Clements, Comm’r, concurring in part and dissenting in part at PP 7-8); WBI Energy Transmission, Inc., 185 FERC ¶ 61,036 (2023) (Clements, Comm’r, dissenting in part at PP 2-3); Venture Glob. Plaquemines LNG, LLC, 185 FERC ¶ 61,037 (2023) (Clements, Comm’r, dissenting in part at PP 2-3); Tex. E. Transmission, LP, 185 FERC ¶ 61,038 (2023) (Clements, Comm’r, dissenting in part at PP 2-3); Trailblazer Pipeline Co., 185 FERC ¶ 61,039 (2023) (Clements, Comm’r, dissenting in part at PP 2-4); Equitrans, L.P., 185 FERC ¶ 61,040 (2023) (Clements, Comm’r, dissenting in part at PP 2-4); Port Arthur LNG Phase II, LLC, 184 FERC ¶ 61,184 (2023) (Clements, Comm’r, dissenting in part at PP 2-3); Venture Glob. Calcasieu Pass, LLC, 184 FERC ¶ 61,185 (2023) (Clements, Comm’r, dissenting in part at PP 2-4); N. Nat. Gas Co., 184 FERC ¶ 61,186 (2023) (Clements, Comm’r, dissenting in part at PP 2-3); Tex. E. Transmission, LP, 184 FERC ¶ 61,187 (2023) (Clements, Comm’r, dissenting in part at PP 2-4); Equitrans, LP, 183 FERC ¶ 61,200 (2023) (Clements, Comm’r dissenting at PP 2-3); Commonwealth LNG, LLC, 183 FERC ¶ 61,173 (2023) (Clements, Comm’r, dissenting at PP 5-8); Rio Grande LNG, LLC, 183 FERC ¶ 61,046 (2023) (Clements, Comm’r, dissenting at PP 14-15); Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047 (2023) (Clements, Comm’r, dissenting at PP 14-15).
[3] See Rehearing Request at 19-21.
[4] NGA § 7(e), 15 U.S.C. § 717f(e).
[5] See Vecinos Para el Bienstar de la Comunidad Costera v. FERC, 6 F.4th 1321, 1329, 1331 (D.C. Cir. 2021) (Vecinos) (finding the Commission’s analysis of climate change impacts deficient under both the NGA and NEPA and directing the Commission to revisit its public interest determination after correcting deficiencies); see also Del. Riverkeeper Network v. FERC, 45 F.4th 104, 109, 115 (D.C. Cir. 2022) (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 v. FERC, 925 F.3d 510, 518-519 (D.C. Cir. 2019) (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).
[6] See, e.g., Cntr. for Biological Diversity v. FERC, 67 F.4th 1176, 1188 (D.C. Cir. 2023) (holding that the Commission makes an appropriate NGA public interest determination when it finds that a project has “substantial economic and commercial benefits” that are “not outweighed by the projected environmental impacts”); Sierra Club v. FERC, 827 F.3d 36, 42 (D.C. Cir. 2016) (“As required by the Natural Gas Act and NEPA, the Commission undertook an extensive review of the Freeport Projects.”); City of Oberlin v. FERC, 937 F.3d 599, 602 (D.C. Cir. 2019) (holding that “[a]s part of the Section 7 certificating process. . . the Commission must complete an environmental review of the proposed project under the National Environmental Policy Act.” (emphasis added)); Minisink Residents for Env’t Pres. & Safety v. FERC, 762 F.3d 97, 106–11 (D.C. Cir. 2014) (stating that FERC is obligated to consider alternatives to a proposed project that might better serve the public interest, including on the basis of their environmental impact, when issuing a certificate under Section 7).
[7] Fed. Power Comm’n v. Transcon. Gas Pipe Line Corp., 365 U.S. 1, 5 (1961).
[8] NAACP v. Fed. Power Comm’n, 425 U.S. 662, 670 n.6 (1976).
[9] See, e.g., S. Coast Air Quality Mgmt. Dist. v. FERC, 621 F.3d 1085, 1099 (9th Cir. 2000).
[10] 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) (1999 Certificate Policy Statement).
[11] Id., 88 FERC ¶ 61,227 at 61,737 (emphasis added).
[12] See id. at 61,748. The Commission has clarified that, under this policy, it may deny a certificate under section 7 of the NGA if a proposed project’s environmental harms outweigh its benefits. Order Clarifying Statement of Policy, 90 FERC ¶ 61,128, at 61,397 (“[T]here may be cases in which service on an existing pipeline is an alternative to construction and the cumulative adverse impacts on an existing pipeline and its customers as well as on landowners and the environment are significant enough that the balance would tip against certification.”).
[13] Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349 (1989) (emphasis added).
[14] 42 U.S.C. § 4332; see also 42 U.S.C. § 4331 (setting forth NEPA’s environmental protection objectives).
[15] Cf. Village of Barrington v. Surface Transp. Bd., 636 F.3d 650, 665-66 (D.C. Cir. 2011) (upholding agency’s interpretation of “public interest” in its organic statute to include environmental considerations given NEPA’s language and goals).
[16] 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))).
[17] See Rehearing Request at 7-8, 10-12, 19-25.
[18] In Vecinos, the D.C. Circuit Court of Appeals found the Commission must reconsider its NGA public interest determinations because they rested on a deficient EIS. See Vecinos, 6 F.4th 1321 at 1331.
[19] Rehearing Request at 19-20 (quoting 40 C.F.R. § 1502.16(a)(1)). The Commission’s regulations implementing NEPA provide that the Commission will comply with CEQ’s regulations under the statute. 18 C.F.R. § 380.1.
[20] See Sierra Club v. FERC, 867 F.3d 1357, l1374 (D.C. Cir. 2017).
[21] Final EIS at 4-210.
[22] Certificate Order, 185 FERC ¶ 61,130 at P 101.
[23] Rehearing Order, 187 FERC ¶ 61,024 at P 30.
[24] N. Nat. Gas Co., 174 ERC ¶ 61,189, at P 32 (2021).
[25] Id. at P 31 & n. 47 (citing Dep’t of Transp. v. Pub. Citizen, 541 U.S. 752, 768 (2004)).
[26] See Rehearing Request at 22-25.
[27] See Sabine Pass Liquefaction Expansion, LLC, 151 FERC ¶ 61,012, at P 101 (2015) (Rejecting use of the SC-GHG because “(1) the EPA states that ‘no consensus exists on the appropriate [discount] rate to use for analyses spanning multiple generations’ and consequently, significant variation (between 300 and 400 percent) in output can result; (2) the tool does not measure the actual incremental impacts of a project on the environment; and (3) there are no established criteria identifying the monetized values that are to be considered significant for NEPA purposes.”); Dominion Cove Point LNG, LP, 151 FERC ¶ 61,095, at P 54 (2015) (holding the same); Columbia Gas Transmission, LLC, 153 FERC ¶ 61,064, at P 70 (2015) (holding the same).
[28] EarthReports, Inc. v. FERC, 828 F.3d 949, 956 (D.C. Cir. 2016).
[29] See Ctr. for Biological Diversity v. FERC, 67 F.4th 1176, 1184 (D.C. Cir. 2023) (“As in EarthReports, FERC had no obligation in this case to consider the social cost of carbon.”); Del. Riverkeeper Network v. FERC 45 F.4th 104, 111 (D.C. Cir. 2022) (“This court has upheld similar explanations [for rejecting use of the SC-GHG protocol] as sufficient to justify the Commission’s refusal to use the Social Cost of Carbon tool.” (citing to EarthReports)); Sierra Club v. FERC, 672 Fed. Appx. 38 (D.C. Cir. 2016) (unpublished) (“This Court has already considered and rejected identical arguments relating to the social cost of carbon.” (citing to EarthReports)).
[30] See Fla. Se. Connection, LLC, 164 FERC ¶ 61,099, at P 37 (2018).
[31] Id. at PP 32-35.
[32] See CEQ, National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions and Climate Change, 88 Fed. Reg. 1196 (Jan. 9, 2023) (CEQ Interim GHG Guidance).
[33] NEPA § 204(3); 42 U.S.C.§ 4344(3).
[34] CEQ Interim GHG Guidance, 88 Fed. Reg. at 1202.
[35] CEQ, Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews at 33 n.86 (Aug. 1, 2016), https://ceq.doe.gov/docs/ceq-regulations-and-guidance/nepa_final_ghg_guidance.pdf.
[36] Rio Grande LNG, LLC, 185 FERC ¶ 61,080 (2023) (Clements, Comm’r, dissenting in part at P 11). Under Section 1502.21 of CEQ’s NEPA regulations, where the means to obtain information relevant to a reasonably foreseeable impact are not known, the agency must include in its EIS “[t]he agency’s evaluation of such impacts based upon theoretical approaches or research methods generally accepted in the scientific community.” 40 C.F.R. § 1502.21(c)(4).
[37] Exec. Order No. 13990, 86 Fed. Reg. 7037 (Jan. 25, 2021).
[38] Id. at § 5(a) (emphasis added).
[39] See, e.g., Jeremy Martinich et al., 19. Economics in Fifth National Climate Assessment (Allison Crimmins et. al. eds., 2023) (“It is sometimes important for governments or institutions to quantify the overall economic impact of climate changes caused by certain current activities . . . A succinct summary description of the benefits of emissions reductions widely used in economic analyses is the ‘social cost of greenhouse gases,’ defined as the cumulative global economic harm to society caused by additional greenhouse gas emissions.”); Intergovernmental Panel on Climate Change, Global warming of 1.5°C at 150 (2018) (“[T]he Social Cost of Carbon (SCC) measures the total net damages of an extra metric ton of CO2 emissions due to the associated climate change. Negative and positive impacts are monetized, discounted and the net value is expressed as an equivalent loss of consumption today. The SCC can be evaluated for any emissions pathway under policy consideration.”).
[40] See Exec. Order 13990, 86 Fed. Reg. 7037 (Jan. 20, 2021) (“It is essential that agencies capture the full costs of greenhouse gas emissions as accurately as possible, including by taking global damages into account. . . . The ‘social cost of carbon’ (SCC), ‘social cost of nitrous oxide’ (SCN), and ‘social cost of methane’ (SCM) are estimates of the monetized damages associated with incremental increases in greenhouse gas emissions. . . . An accurate social cost is essential for agencies to accurately determine the social benefits of reducing greenhouse gas emissions when conducting cost-benefit analyses of regulatory and other actions.”); see also EPA, Docket ID No. EPA-HQ-OAR-2021-0317, EPA Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances 1 (2023) (“The SC-GHG allows analysts to incorporate the net social benefits of reducing emissions of greenhouse gases (GHG), or the net social costs of increasing GHG emissions, in benefit-cost analysis and, when appropriate, in decision-making and other contexts.”); CEQ Interim GHG Guidance, 88 Fed. Reg. 1196, 1202-1203 (“SC–GHG estimates allow monetization (presented in U.S. dollars) of the climate change effects from the marginal or incremental emission of GHG emissions, including carbon dioxide, methane, and nitrous oxide. . . . The SC–GHG provides an appropriate and valuable metric that gives decision makers and the public useful information and context about a proposed action’s climate effects even if no other costs or benefits are monetized, because metric tons of GHGs can be difficult to understand and assess the significance of in the abstract. . . . The SC–GHG also can assist agencies and the public in assessing the significance of climate impacts.”).
[41] See Interagency Working Group on Social Cost of Greenhouse Gases, Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990 at 12 (2021).
[42] See supra at P 10.
[43] See, e.g., 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 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 to assess climate impacts).
[44] See CEQ Interim GHG Guidance, 88 Fed. Reg. 1196, 1202 (“[M]etric tons of GHGs can be difficult to understand and assess the significance of in the abstract. The SC–GHG translates metric tons of emissions into the familiar unit of dollars, [and] allows for comparisons to other monetized values.”); see also Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349 (1989) (noting that NEPA “guarantees that the relevant information will be made available to the larger audience that may also play a role in both the decisionmaking process and the implementation of that decision”).
[45] See, e.g., Mt. Valley Pipeline, LLC, 161 FERC ¶ 61,043, at P 295 (2017).
[46] Interagency Working Group on Social Cost of Greenhouse Gases, Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990 at 9 (2021) (“The SC-GHGs are calculated along a baseline path and provide a measure of the marginal benefit of GHG abatement.”).
[47] Interagency Working Group on Social Cost of Carbon, Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 at 8 (2010).
[48] David Anthoff & Richard S.J. Tol, The Climate Framework for Uncertainty, Negotiation and Distribution (FUND), Technical Description, Version 3.8 at 6-8, 16-19 (Aug. 7, 2014), https://www.fund-model.org/files/documentation/Fund-3-8-Scientific-Documentation.pdf.
[49] Fla. Se. Connection, LLC, 162 FERC ¶ 61,233, at P 48 (2018) (“On further review, we accept that the Social Cost of Carbon methodology does constitute a tool that can be used to estimate incremental physical climate change impacts.”); see also Mt. Valley Pipeline, LLC, 163 FERC ¶ 61,197, at P 290 (2018) (same).
[50] Memorandum from the Interagency Working Group on Social Cost of Greenhouse Gases 1 (Dec. 22, 2023), https://www.whitehouse.gov/wp-content/uploads/2023/12/IWG-Memo-12.22.23.pdf.
[51] Id.
[52] EPA, Docket ID No. EPA-HQ-OAR-2021-0317, EPA Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances at 1 (2023).
[53] For example, EPA’s SC-GHG value relies on the Finite Amplitude Impulse Response (FaIR) model, recommended by the NAS, to better model climate systems. Id. at 1-2.
[54] EPA, EPA Fact Sheet: Social Cost of Carbon 2 (Dec. 2015) https://www.epa.gov/sites/default/files/2016-07/documents/social-cost-carbon.pdf (stating that “no consensus exists on the appropriate [discount] rate to use for analyses spanning multiple generations”).
[55] EPA, Docket ID No. EPA-HQ-OAR-2021-0317, EPA Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances 73 (Nov. 2023). This conceptual approach has been widely accepted. See Interagency Working Group on Social Cost of Greenhouse Gases, Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990 at 3 (2021) (“Consistent with the findings of the National Academies and the economic literature, the IWG continues to conclude that the consumption rate of interest is the theoretically appropriate discount rate in an intergenerational context.” (internal citations omitted)); National Academies of Sciences, Engineering, and Medicine, Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide, National Academies 9 (2017) (“The Interagency Working Group should choose parameters for the Ramsey formula that are consistent with theory and evidence and that produce certainty equivalent discount rates consistent, over the next several decades, with consumption rates of interest.”).
[56] See, e.g., Mt. Valley Pipeline, LLC, 171 FERC ¶ 61,232, at P 102 & n.225 (2020).
[57] Interagency Working Group on Social Cost of Greenhouse Gases, Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990, at 4 (2021) (emphasis added). The IWG found that it remained appropriate for agencies to use 2.5%, 3%, and 5% discount rates because the old discount rates were “subject to public comment” between 2010 and 2016. Id. As with other elements of the SC-GHG Protocol discussed in this statement, the Commission should look to the latest science in determining the appropriate discount rate to use, and that is readily found in EPA’s updated SC-GHG Protocol.
[58] EPA, Docket ID No. EPA-HQ-OAR-2021-0317, EPA Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances 70 (2023). EPA’s revised protocol uses a dynamic discount rate over a longer time horizon, which comports with NAS’s recommendations. It is also consistent with the 2% near-term discount rate employed in the recent Resources for the Future SC-GHG estimate. See Kevin Rennert et al., Comprehensive Evidence Implies a Higher Social Cost of CO2, 610 Nature 687 (2022). The academic literature shows broad agreement that the IWG’s interim SC-GHG value at a 5% discount rate underprices GHG harms. See Robert S. Pindyck, The Social Cost of Carbon Revisited, 94 J. Env’t Econ. & Mgmt. 140 (2019) (finding a surveyed group of experts estimated a social cost of carbon of $200/metric ton and that if data were restricted to the subset of experts who expressed a high degree of confidence in their answers, a price of $80-$100/metric ton. This price exceeds the $76 social cost of carbon proposed by the IWG using a 2.5% discount rate); see also Richard S.J. Tol, Social Cost of Carbon Estimates Have Increased Over Time, 13 Nature Climate Change 532 (2023); Martin C. Hänsel et. al., Climate Economics Support for the UN Climate Targets, 10 Nature Climate Change 781 (2020).
[59] See Certificate Order, 185 FERC ¶ 61,130 at P 95.
[60] Id.
[61] As one court observed, rejecting the SC-GHG Protocol for lack of precision makes no sense. See High Country Conservation Advocs. v. U.S. Forest Serv., 52 F. Supp. 3d at 1192 (“[E]ven if the agencies had argued the protocol was controversial because it is imprecise . . . neither the BLM’s economist nor anyone else in the record appears to suggest the cost is as low as $0 per unit. Yet by deciding not to quantify the costs at all, the agencies effectively zeroed out the cost in its quantitative analysis.”).
[62] Rehearing Order, 187 FERC ¶ 61,024 at P 29.
[63] See, e.g., FERC, FERC/EIS-0250F, Final Environmental Impact Statement Freeport LNG Liquefaction Project Phase II Modification Project at 4-119 to 4-120 (2014) (finding that estimated annual tax revenue of $36 million would be significant); Freeport LNG Dev., L.P., 148 FERC ¶ 61,076, at PP 35, 73 (2014) (noting the Commission “concur[ed] with the findings set forth in the June 2014 final environmental impact statement” including that “[s]ome socioeconomic impacts on the Town of Quintana will be positive such as the additional tax base”); FERC, FERC/EIS-0175F, Final Environmental Impact Statement for the Entrega Pipeline Project at 3-129 (2005) (finding that revenues of $2.4 million from pipeline project’s property taxes would “be a significant benefit associated with the project,” in light of “the relatively low demands on public services and facilities”); Entrega Gas Pipeline, Inc., 112 FERC ¶ 61,177, at P 74 (2005) (“[W]e agree with the conclusions presented in the EIS”).
[64] See, e.g., ANR Pipeline Co., 185 FERC ¶ 61,191 (2023) (Clements, Comm’r, dissenting in part at P 3); Transcon. Gas Pipe Line Co., 185 FERC ¶ 61,133 (2023) (Clements, Comm’r, dissenting in part at P 4); Transcon. Gas Pipe Line Co., 185 FERC ¶ 61,130 (2023) (Clements, Comm’r, dissenting in part at P 3).
[65] See supra note 63.
[66] CEQ Interim GHG Guidance, 88 Fed. Reg. at 1202.
[67] I would support performing cost-benefit analysis for NGA section 7 project applications because it would allow for a more robust, transparent balancing of benefits and adverse effects. The Certificate Policy Statement states that “vague assertions of benefits” will not be accepted, but the reality is that they too often are because the Commission does not require applicants to quantify the value of claimed benefits. 1999 Certificate Policy Statement, 88 FERC ¶ 61,227 at 61,748.
[68] 40 C.F.R. § 1502.21(c)(4).