Dear Senator Barrasso,

Thank you for your letter dated December 15, 2021, in which you express concerns regarding how the Commission is processing applications in its natural gas docket.

In your letter, you ask that my colleagues and I confirm or rebut five conclusions that you have drawn from information provided in 2021. You express concern that until the Commission shows that your “conclusions are inaccurate or outdated,” it “will almost certainly have a negative impact on the American people, our national security, and the economy of the United States.”1 You ask that we respond expeditiously and in accordance with our ex parte communication rules.

As in my responses to prior letters, in order to avoid any appearance of prejudgment and to comply with the Commission’s ex parte communication rules, the content of my answers will be limited to: the text of relevant statutes and regulations; procedural information regarding pending proceedings; factual, historical information regarding past Commission issuances; and recitations of the contents of my separate statements.

With that background, I now address your five stated conclusions.

1. Despite assurances to the contrary, as a practical matter, the Commission staff has applied a de facto standard for how it will consider downstream greenhouse gas emissions from natural gas pipelines. Specifically, it has required an Environmental Impact Statement for applications for which it previously would have required an Environmental Assessment.

You are correct that the Commission now has a de facto policy to prepare an Environmental Impact Statement (EIS) for applications that would previously have required an EA. As I explained in my November 29, 2021 response to your September 15, 2021 letter,2 Commission staff (which works under the supervision of the Chairman) now prepares an EIS for projects that it determines may annually emit more than 20,006 metric tons of carbon dioxide equivalent (CO2e),3 the quantity of emissions the majority determined to be insignificant in Northern Natural Gas Company.4 Chairman Glick all but confirmed this to be the case when he stated that the National Environmental Policy Act (NEPA) “requires the Commission to prepare an EIS when issuing a certificate of public convenience and necessity, unless the Commission can determine that the project either will not cause any significant adverse impacts or that such impacts will be mitigated.”5

I have updated Figures 1 and 2 from my November 29, 2021 response and have included them as Appendix A. I derive the anticipated environmental documents in Figure 1 from the notices issued for pending applications proposing new construction and operation (i.e., those applications listed in Appendices C and D). Notably, and not included, are the draft and final Supplemental EISs for the Spire STL Pipeline Project.6 To prepare an EIS at this stage in the Spire proceeding is unusual to say the least: an EA was prepared within the last five years,7 the applicant has not proposed any changes to its facilities, and the court’s vacatur and remand were rooted in the Commission’s failure to explain its need determination and wholly unrelated to the sufficiency of our environmental review.8

I would like to make four additional observations. First, NEPA requires that Federal agencies “include in every recommendation or report on . . . major Federal actions significantly affecting the quality of the human environment, a detailed statement” on the environmental effects of the proposed action and alternatives to the proposed action.9 NEPA simply requires that “agencies take a ‘hard look at environmental consequences’” of their actions.10 NEPA itself contains no statutory requirement that the hard look take the form of an EIS or an EA—those are paradigms established by the Council on Environmental Quality’s (CEQ) implementing regulations.

Second, CEQ regulations counsel the preparation of an EA when the significance of impacts are unknown. Section 1501.5(a) states, “[a]n agency shall prepare an environmental assessment for a proposed action that is not likely to have significant effects or when the significance of the effects is unknown unless the agency finds that a categorical exclusion is applicable or has decided to prepare an environmental impact statement.”11 Although members of the Commission have referred to the significance of a project’s emissions on climate change using what some have called an “eyeball test,”12  Commission staff states that it “continues to be unable to determine significance with regards to climate change impacts.”13

Third, the Commission’s de facto policy is contrary to the Commission’s regulations implementing NEPA. Section 380.6(a) of the Commission’s regulations states:

an environmental impact statement will normally be prepared first for the following projects:

1. Authorizations under sections 3 or 7 of the Natural Gas Act and DOE Delegation Order No. 0204-112 for the siting, construction, and operation of jurisdictional liquefied natural gas import/export facilities used wholly or in part to liquefy, store, or regasify liquefied natural gas transported by water;
2. Certificate applications under section 7 of the Natural Gas Act to develop an underground natural gas storage facility except where depleted oil or natural gas producing fields are used;
3. Major pipeline construction projects under section 7 of the Natural Gas Act using rights-of-way in which there is no existing natural gas pipeline      14

Many, if not most, of the pending applications do not fall within one of these three categories. For proposed natural gas facilities that do not fall into any of these three categories, or that are not categorically excluded from NEPA review, section 380.5 of the Comission’s regulations provides that the Commission will normally first prepare an EA.15 Section 380.5 also states that “depending on the location or scope of the proposed action, or the resources affected, the Commission may in specific circumstances proceed directly to prepare an environmental impact statement.”16 The Commission’s regulations do not contemplate that an EIS will be the default environmental document.

Fourth, the Commission has rejected arguments that it must prepare an EIS instead of an EA to consider greenhouse gases.17 In Dominion Energy Cove Point LNG, LP, the Commission stated:

NEPA and the CEQ’s implementing regulations offer no direct guidance for circumstances where, as discussed above, there is no established standard that would assist the Commission to ascribe significance to an impact on a particular resource, here [greenhouse gas (GHG)] emissions. If the Commission were to prepare an EIS here . . . the EIS would simply reiterate the discussion of GHG emissions and climate change set forth in the EA. This would neither enhance agency decisionmaking nor result in more meaningful public comment . . . . Accordingly, we find that preparation of an EIS in these circumstances is not consistent with NEPA’s rule of reason.18

Likewise, in Transcontinental Gas Pipe Line Company, LLC, the Commission determined that preparing an EIS would “neither enhance agency decision making nor result in more meaningful public comment.”19 The Commission also added that “[a]s the Council on Environmental Quality has explained, ‘NEPA’s purpose is not to generate paperwork—even excellent paperwork—but to foster excellent action.’”20

It is worth noting that the draft and final supplemental EISs for projects with previously issued EAs have done the following: updated the discussion of GHG emissions and climate change set forth in the previously issued EA, provided the full- burn downstream emissions, and compared the project’s and downstream emissions to national emissions and state climate policies.21

2. To varying degrees, each of you has indicated that FERC should conduct an analysis of the impact of its new de facto standard for compliance with the National Environmental Policy Act on the affordability or reliability of natural gas or electric service. Yet, to date, the Commission has not conducted such an analysis or made public plans to conduct one.

To my knowledge, you are correct that the Commission has neither conducted nor plans to conduct an analysis of how its new de facto standard for complying with NEPA affects the affordability or reliability of natural gas or electric service. I have previously stated that “[s]uch an analysis would be valuable to ensure that the Commission’s policy is consistent with the NGA’s purpose to ‘encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.’”22 The North American Electric Reliability Corporation (NERC) recently highlighted just how important natural gas is to our electric system when it explained in its most recent Long Term Reliability Assessment that “[n]atural gas is the reliability ‘fuel that keeps the lights on,’ and natural gas policy must reflect this reality.”23

I am also not aware of any plans to conduct a study on the reliability and affordability effects of any potential GHG mitigation regime that the Commission might choose to impose. It would be wise to conduct such an examination before the Commission were to implement such a policy.24 In my view, such study would not only aid us in ensuring that our policies were consistent with the NGA’s purpose, but would also aid the Commission in ensuring that it does not excede its NGA section 7(e) authority which limits the Commission to imposing only “reasonable terms and conditions as the public convenience and necessity may require.”25 It would also help ensure that the Commission does not excede its authority under NEPA since the CEQ regulations that are currently in force affirmatively prohibit agencies from even considering environmental effects (like most downstream emissions) that “the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.”26

On November 19, 2021, the Commission held a Technical Conference on Greenhouse Gas Mitigation to “discuss methods natural gas companies may use to mitigate the effects of direct and indirect greenhouse gas emissions resulting from Natural Gas Act sections 3 and 7 authorizations.”27 The Commission did not solicit comment on the impacts of GHG mitigation on affordability or reliability of natural gas and the electric power sector.28 And while some conference participants29 and post- technical conference comments touched upon the subject,30 additional analysis would be warranted before the Commission takes further action.

Moreover, I note that you previously asked whether the Commission had “undertaken an analysis on the impacts to reliability and affordability of natural gas and electric service or the impacts to jobs if pipeline projects that the Commission has found to be necessary can be collaterally attacked after the Commission has issued a certificate for such projects[.]”31 You asked this in light of the Commission’s February 18, 2021 Order Establishing Briefing (Briefing Order)32 regarding the Weymouth Compressor Station owned and operated by Algonquin Gas Transmission and Maritimes & Northeast Pipeline, LLC.33 You also stated, that you were “concerned that the [Briefing Order] will result in threats to the reliability and affordability of natural gas and electric service should it further erode regulatory certainty.”34

Given your concerns, I wanted to highlight for you that the Commission terminated the Briefing Order on January 20, 2022.35 Although I agreed with this outcome—indeed, I believed it was legally compelled—I nevertheless issued a statement dissenting in part for two reasons: first because the order again includes language appearing to declare that the Commission has the legal authority to revisit final, non- appealable certificate orders,36 and second, because the order relied, in part, upon invented, post hoc rationales for the Briefing Order’s issuance.37 I explained that “[a]fter everything that has happened in this proceeding, the only means by which the Commission could have restored confidence would have been to admit error,”38 and that “[t]he Briefing Order, and now this order, make it even less appealing to develop and finance needed energy infrastructure.”39 For your convenience, my separate statement to the Commission’s recent order terminating briefing is attached as Appendix B.

3. Putting aside particular calcuations, the time FERC has taken to consider certificate applications to construct new and upgrade existing interstate natural gas pipelines has been greater since January 21, 2021 than the time that FERC took to consider such applications prior to January 21, 2021.

Your conclusion is correct. To demonstrate that this is the case, I have updated the charts from my November 29, 2021 letter, which are attached as Appendices C and D. In addition, I have prepared an additional chart (Appendix E) calculating the Commission’s actual and estimated processing times of NGA section 3 and NGA section 7 applications that involved construction or operational changes.

Since January 21, 2021, only eight orders have been issued to authorize the construction and operation of section 3 and section 7 facilities.40 For each of these applications, the Commission prepared an EA. On average, the applications were processed in 11.51 months.41 The Commission’s processing time for projects with EAs from 2011 through 2020 was 9.4 months.42

Of course, the projects that receive EISs will likely take much longer. By the end of February, there will be four applications that will have been pending before the Commission for over two years.43 For context, from 2011 through 2020, on average, the Commission took 25.2 months to process an application where an EIS was prepared—the now-default NEPA document.44

Appendix E shows that, when considering actual process times and the estimated times for pending projects, it will take the Commission, on average, 16.04 months.45

This average is also almost certainly optimistic. I remind you that my estimates are based on data from January 1, 2019 through May 24, 2021. It is also worth noting that the Commission has already exceeded my timelines in the case of three of the orders for which I provided estimates in my November 29, 2021 response to your September 15, 2021 letter.46

Of course, it goes without saying that the delays described above cannot take into account any further delays that might be caused by the Commission’s issuance of a new Certificate Policy Statement—should one issue and should it apply to pending applications. Depending upon how drastic any adopted changes might be and to whom those changes might apply, project sponsors with pending applications could concieveably be required by the Commission to satisfy new requirements and, if truly onerous, this could result in the project sponsor having to reassess the economics of its project, amend its proposed recourse rates, renegotiate rates with committed shippers, amend other agency permit applications, and so forth. These would likely not be quick or easy tasks.47

4. The Chairman has stated that “the Commission has the authority to deny a pipeline certificate on the ground that the project would be too harmful for the environment.” At best, this assertion is not settled law. At worse, if acted upon, it would violate the Natural Gas Act. If this view prevails, it will fundamentally change the role of the Commission.

Your conclusion is correct to the extent to which it rests upon the claims advanced by some that the Comission has authority to deny a certificate application because the upstream effects of the production or downstream effects of the use of natural gas could be found to cause too much environmental damage.

Chairman Glick’s quote appears to paraphrase the majority opinion in Sierra Club v. FERC (Sabal Trail): “Because FERC could deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment, the agency is a ‘legally relevant cause’ of the direct and indirect environmental effects of pipelines it approves.”48 The majority based its statement on (1) “Congress broadly instruct[ing] the agency to consider ‘the public convenience and necessity’ when evaluating applications”49 and (2) that “FERC will balance ‘the public benefits against the adverse effects of the project.’”50

As you suggest, the assertion that the Commission can deny a pipeline based on upstream or downstream activities is not settled law. Judge Brown, in her concurrence in part and dissent in part, stated, “nothing in the text of either [the Natural Gas Act or National Environmental Policy Act] empowers the Commission to entirely deny the construction of an export terminal or the issuance of a certificate based solely on an adverse indirect environmental effect regulated by another agency.”51 Other than the Sabal Trail majority opinion, I am not aware of another opinion that suggests the Commission has such authority and, in fact, much of Sabal Trail’s reasoning has been called into question by another appellate court.52

Likewise, as you suggest, there are those who believe that denying a project because the upstream production or downstream use of natural gas is too harmful for the environment would violate the NGA. Commissioner Bernard L. McNamee wrote extensively on this subject while on the Commission.53 Former FERC Chairman Joseph T. Kelliher, in his post-technical conference comments, stated, “[i]f imposing mitigation for direct and indirect emissions discourages or forestalls pipeline develoment, the mitigation policy is directly contrary to the principal purpose of the Natural Gas Act and must be set aside.”54 Some have also stated that if the Commission were to deny a pipeline because of upstream or downstream activities “the Commission would be commandeering each State’s authority to decide its energy mix and climate policies/goals.”55

There are also those who have said that, should the Commission declare that it has the power to deny a pipeline application because of upstream or downstream environmental consequences—a seeming possibility given that the questions posed at the latest technical conference presumed that the Commission has such authority—then the role of the Commission will have fundamentally changed from being that of an economic regulator to an environmental regulator.56

Jurisdiction is fundamental. When adjudicators are uncertain of their authority, they have a duty to determine whether they are privileged to exercise it. At a time when the Commission is employing its powers in increasingly novel ways, it is all the more important for commissioners to ask the most basic question: “do we have the authority to do what we are doing?”57 Given recent issuances, I have found that the Commission has grown increasingly reluctant to ask that basic question.58

5. Delays and uncertainty associated with FERC’s consideration of certificate applications to construct new and upgrade existing interstate natural gas pipelines have contributed to the cancellation of these projects. These delays and uncertainty have shaken customers’ and investors’ confidence which is necessary for the development of natural gas projects.

I believe your conclusion to be correct. At least two projects were cancelled last year because of the new uncertainty attending the Commission’s consideration of certificate applications.59 I suspect that more project cancellations may occur depending on whether and how the Commission requires pipelines to mitigate greenhouse gases produced by their facilities’ operations and by upstream and downstream activities.60

I can only assume that the delays and uncertainty caused by the Commission have shaken investors’ and pipeline companies’ confidence. You saw the evidence of their apprehension in the cancelled projects.61 It might also interest you to know that customers have become apprehensive as well, doubting whether they will be able to obtain the supplies of gas they need. Some have gone so far as to file requests for expedited action in pending certificate proceedings.

On December 21, 2021, Consoldiated Edison Company of New York, Inc. (Con Edison) filed comments in the Tennessee Gas Pipeline Company, LLC East 300 Upgrade Project proceeding (Docket No. CP20-493-000) stating: “Con Edison respectfully requests that the Commission not delay acting on Tennessee’s requested certificate to construct and operate the Project, which Con Edison needs to meet its statutory responsibility to reliably serve its customers.”62

Similarly, on December 17, 2021, National Grid Gas Delivery Companies filed comments in the Iroqouis Gas Transmission System, L.P. Enhancement by Compression Proejct proceeding (Docket No. CP20-48-000), stating: “further delays in the permitting and implementation of the ExC Project expose National Grid to significant curtailment and moratorium risk within the next five years.”63 It is clear from the customers’ submissions in support of timely review, that the Commission’s certificate review process is not solely the concern of project sponsors.

Thank you for the opportunity to share my thoughts about our certificate proceedings. If I can be of any further assistance with these issues or any other Commission matter, please do not hesitate to contact me.

Sincerely,

James P. Danly Commissioner

62 Con Edison, December 21, 2021 Motion for Leave to Answer and Answer, Docket No. CP20-493-000, at 5; see also id. at 2 (“Con Edison respectfully requests that the Commission issue the requested certificate as soon as possible to avoid delays to the Project so that Con Edison may end its need to rely on trucked [compressed natural gas] for peak day needs, lift the moratorium, and provide gas service to its customers who request it.”).

63 National Grid, December 17, 2021 Letter, Docket No. CP20-48-000, at 2 (citation omitted); see also Con Edison, January 28, 2022 Letter, Docket No. CP20-48- 000 (“Delaying approval of the Project will harm Con Edison’s ability to safely and reliably serve customer demand, including service to Con Edison’s existing customers.”); National Grid, January 27, 2022 Letter, Docket No. CP20-48-000 at 8 (“National Grid has been clear that further delays in the permitting of the Project will impede its ability to fulfill its legal obligation to reliably serve customer demand.”).

Appendix C

i I used January 25, 2022 as the end date for the calculation. The calculated number of days does not include the end date.

ii NEPA process documents include notices requesting environmental scoping comments, notice of intent (NOI) to prepare an Environmental Assessment (EA) or Environmental Impact Statement (EIS), and notices of schedule for an EA or EIS.

iii I used January 25, 2022 as the end date for the calculation. The calculated number of days does not include the end date.

iv Prior practice refers to before the May 27 notices. I am using 4 months as the time between the final NEPA document and order issuance because that was the average processing time from January 1, 2019 to May 24, 2021. If the date falls on a Saturday, Sunday, or holiday, I use the following weekday as the order date estimate.

v I am using 4 months as the time between the final NEPA document and order issuance because that was the average processing time from January 1, 2019 to May 24, 2021.  If the date falls on a Saturday or Sunday, I use the following weekday as the order date estimate.

vi In Order No. 871-B, the Commission established a policy to stay all certificate and permit proceedings for up to 150 days if there is a landowner protest. See Order No. 871-B, 175 FERC ¶ 61,098 at PP 43-51. To avoid the appearance of prejudging any pending cases, I assume the maximum stay for all certificates . vii This order was scheduled and voted down at the January 2021 Open Meeting—the last meeting I served as Chairman.

viii This is a revised date in which the Commission noticed on September 2, 2021. On May 27, 2021, the Commission issued a Notice of Intent to Prepare an Environmental Impact Statement that identified September 3, 2021, as the final issuance date. The revised schedule stated the delay was due to “the number and complexity of comments received on the draft EIS.” Iroquois Gas Transmission, L.P.,1 Notice of Revised Schedule for Environmental Review of the Enhancement by Compression Project, Docket No. CP20-48-000 (Sept. 2, 2021).

ix I do not calculate the estimated date as the notice for supplemental NEPA review was related to historic properties issues. See Gas Transmission Northwest LLC, Notice of Schedule for the Preparation of an Environmental Assessment for the Coyote Springs Compressor Station Project, Docket No. CP21-29-000, at 1 (Nov. 5, 2021).

Appendix D

Pending NGA Sections 3(a) and 7(c) Applications without Environmental Documents

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i I used January 25, 2022 as the end date for the calculation. The calculated number of days does not include the end date.

ii I am using 4 months as the time between the final NEPA document and order issuance because that was the average processing time from January 1, 2019 to May 24, 2021.

iii In Order No. 871-B, the Commission established a policy to stay all certificate and permit proceedings for up to 150 days if there is a landowner protest. See Order No. 871-B, 175 FERC ¶ 61,098, at PP 43-51. To avoid the appearance of prejudging any pending cases, I assume the maximum stay for all certificates. iv The NEPA document for the Compressor Relocation and Modification project is delayed because the Commission combined its review with the MP 33 Compressor Station Modification Project to avoid improper segmentation. See Chairman Glick September 24, 2021 Letter to Senator Barrasso at 14.

v Commission staff had anticipated issuing an EA by May 13, 2021. See Spire Storage West, Notice of Schedule for the Preparation of an Environmental Assessment for the Clear Creek Expansion Project, Docket CP21-6-000, at 1 (Dec. 9, 2020).

vi This was revised from January 21, 2022, in order to assess various alternatives raised. See Notice of Revised Schedule for Environmental Review of the Clear Creek Expansion Project, Docket No. CP21-6-000 (Jan. 20, 2022) (“The first notice of schedule issued on August 26, 2021, identified January 21, 2022 as the final EIS issuance date. However, environmental staff is in the process of assessing various alternatives raised during the draft EIS comment period. As a result, staff has revised the schedule for issuance of the final EIS.”).

vii These applications were filed in response to Commission Staff’s October 27, 2020 Letter requesting the pipelines to provide information on project disposition and restoration activities. See Commission Staff October 27, 2020 Letter, Docket Nos. CP15-554 and CP15-555.

Appendix E

i Information on the estimated order date is provided in Appendices C and D.