Commissioner James Danly Concurrence in Part and Dissent in Part: Spire STL Pipeline LLC

Commissioner James Danly Statement
December 3, 2021
Docket No. CP17-40-007

I concur in today’s order issuing a temporary certificate to Spire STL Pipeline LLC (Spire) to allow it to continue operating while the Commission considers what action to take on remand.[1]  Having recently discovered the Fifth Circuit case, Hunt Oil Company v. FPC,[2] I now conclude that the case law interpreting the scope of the Commission’s authority is not as one-sided as I had earlier thought it to be.[3]  Since the Commission’s action here constitutes at least a plausible exercise of our authority, is not explicitly prohibited, and Spire’s shipper Spire Missouri Inc. (Spire Missouri) is, from the record now in hand, evidently in dire need of service, I support the issuance of a temporary certificate. 

While I concur with the issuance of a certificate under section 7(c), I dissent insofar as the Commission has again[4] refused to address whether section 7(h) of the Natural Gas Act (NGA) confers eminent domain authority upon temporary certificate holders.[5]  It is a complicated question.  The Commission should announce its view on the matter in the first instance.

While pleased that the Commission has authorized Spire to continue service, I remain troubled by how this entire proceeding has been handled.  Although undoubtedly challenging, the Commission’s prosecution of this matter has suffered a number of self-inflicted wounds.  The first of which was the Chairman’s decision not to seek rehearing of the court’s vacatur of Spire’s certificate, a decision taken in the face of a majority of the Commission deciding otherwise.[6] 

The unforced errors continued with the Chairman’s unprecedented decision to notice Spire’s request for a temporary emergency certificate for a 60-day comment period ending October 5, 2021,[7] despite Spire noting the court’s mandate could be issued as soon as August 13, 2021.[8]  It is not typical Commission practice to establish such a long comment period; they are almost invariably set at 21 days.[9]

The Chairman then allowed unnecessary urgency to build by directing FERC’s lawyers to neither seek delay of the issuance of the court’s mandate nor to support Spire’s request to do so.  Though true that the “legal dream team”[10] failed to persuade the court to reconsider its ruling, nothing could have been lost by the Commission making such a request.  And knowing that nothing could have been lost by asking for a stay or by supporting Spire’s request for one, I can only imagine how the silence of the Commission (the agency charged with ensuring the continuity of service) was perceived.

The Commission then further complicated matters by issuing a temporary emergency certificate sua sponte to avoid a potential cessation of service to Spire Missouri and to buy time to “complete its assessment of the validity of [Spire’s] claims and determine an appropriate course of action.”[11]  Not only did this order allow the Commission to (temporarily) rescue the people of St. Louis from a trap that the Commission itself laid down, but it was logically unjustifiable.  When reduced to its essence, the order amounted to a finding that there would be an emergency while at the same time explicitly reserving to the Commission the right to determine at a later date whether, in fact, there would be an emergency.  Worst of all, the Commission—who issued this order sua sponte and could establish its contents according to its whim—set the temporary emergency certificate to expire in the middle of winter, on December 13, 2021, ginning up the artificial urgency leading to today’s issuance.

The most recent failure came again today with the Commission’s second refusal to interpret whether temporary emergency certificates holders are entitled to exercise eminent domain authority under NGA section 7(h).  As I stated before, “[t]o require the parties to go to court in order to learn whether NGA section 7(h) confers eminent domain authority upon temporary certificate holders is irresponsible and unnecessary.”[12]

The impacts of this mismanagement should not be minimized.  First responders and the public in St. Louis expended significant resources to prepare for a potential state of emergency (loss of service from Spire starting December 13, 2021), despite there being “many more pressing issues that require[d] [their] time, attention, and money.”[13]  Likewise, Spire Missouri prepared for a potential emergency by “investigating and acquiring alternative sources of supply.”[14]  Spire Missouri stated it may “spend $5 million or more in preparation for the upcoming winter heating season without STL Pipeline service. . . .  Spire Missouri will likely need to decide whether to incur these incremental costs in October, which would be unnecessary in the absence of uncertainty regarding Spire STL service . . . .”[15]  It is now December.  In addition, it is likely that commercial and industrial customers prudently hedged their positions by acquiring alternative sources of natural gas to ensure that they would be able to meet their contractual requirements.

Some may argue that these expenditures were unnecessary as it was unlikely that the Commission would allow St. Louis to lose natural gas service for the winter.  That may be true.  However, when one has a duty to serve the public or an obligation to fulfill the terms of a contract, one cannot simply rely on likelihoods.  This is especially true here, given the extraordinarily unusual treatment of Spire’s request,[16] the Commission’s surprise issuances,[17] and the fact that neither the Commission nor any commissioner (to my knowledge) committed to act before the December 13 expiration until November 18, 2021.[18]

For these reasons, I respectfully concur in part and dissent in part.