Commissioner James Danly Statement
December 2, 2021
Docket No. CP95-35-000
I concur with today’s order, which partially grants the request for an extension of time to file briefs.[1] I write separately to express my continued interest in receiving briefing on the Commission’s authority to oversee the safety of liquefied natural gas (LNG) facilities under section 3 of the Natural Gas Act (NGA).[2] As I mentioned in my earlier statement,[3] I have a lingering apprehension that the Commission may not actually have the authority it has exercised over the safety of LNG facilities under section 3 of the NGA, and that it may not have had authority to issue its Remedial Order[4] in the first instance.
In my separate statement to the Briefing Order, I explained why I question whether the Commission has jurisdiction.[5] In response, Chairman Glick and Commissioner Clements issued a compelling and well-researched joint separate statement explaining their view that “[t]he NGA grants the Commission broad authority to regulate the operational safety of jurisdictional LNG facilities.”[6] Their statement did not, however, succeed in “dispel[ling]”[7] my doubts regarding jurisdiction.[8] I acknowledge that the Commission has exercised authority over the safety of LNG facilities for at least four decades,[9] but the source of our jurisdiction is not entirely clear to me.[10] And jurisdiction is fundamental. When adjudicators are uncertain of their authority, they have a duty to satisfy themselves that they are privileged to exercise it. Accordingly, I encourage anyone with an interest in this proceeding, or in the Commission’s jurisdiction over LNG safety more broadly, to read both my separate statement[11] and my colleagues’ separate statement[12] to the Briefing Order and to submit briefing regarding the scope of the Commission’s jurisdiction.[13]
Below, I list a number of questions to solicit specific information regarding the Commission’s authority over LNG terminals.
The Department of Energy (DOE) delegated to the Commission the responsibility to “[a]pprove or disapprove the . . . operation” of import and export facilities.[14] What does “operation” mean in this context? Does it mean that the Commission oversees the safety of LNG import and export facilities for the life of the project? Or does it mean that the Commission may simply approve or reject the proposed project, similar to the Commission’s interpretation of “operation” for pipeline facilities proposed under NGA section 7.[15]
The Commission exercises jurisdiction over the operation of LNG peakshaver plants that are authorized under NGA section 7.[16] Does the term “operation” in section 7 of the NGA give the Commission flexibility to regulate the safety of LNG peakshavers and not pipeline facilities?
NGA section 3 provides authority to grant applications for import and export facilities “in whole or in part, with such modification and upon such terms and conditions as the Commission may find necessary or appropriate . . . .”[17] How does this language affect the meaning of “operation”? Although NGA section 7 includes a similar (although not identical) provision, the Commission does not include terms in a certificate that regulate the safety of pipeline facilities. What weight should be given to the Commission’s interpretation of NGA section 7?
NGA section 3 provides authority to “from time to time, after opportunity for hearing, and for good cause shown, make such supplemental order in the premises as it may find necessary or appropriate.”[18] How does this language affect the meaning of “operation”? What weight should be given to the fact that NGA section 7 does not include a similar provision? Can DOE’s Delegation Order be interpreted as including this authority? Does this provision imply perpetual oversight for all aspects of “operation”?
NGA section 3(e) provides that “[t]he Commission shall have the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal.”[19] Presumably, Congress did not intend for the DOE to have exclusive authority over the operational safety of the LNG terminal. Does the use of “operation” in NGA section 3(e) inform how we should interpret the Commission’s authority?
NGA section 3A(d) provides that
[t]he State commission of the State in which an LNG terminal is located may, after the terminal is operational, conduct safety inspections in conformance with Federal regulations and guidelines with respect to the LNG terminal upon written notice to the Commission. The State commission may notify the Commission of any alleged safety violations. The Commission shall transmit information regarding such allegations to the appropriate Federal agency, which shall take appropriate action and notify the State commission.[20]
How should the italicized sentence be interpreted? How does NGA section 3A(d) inform the Commission regarding its authority to take action to address safety during the operation of the LNG facility?
Section 60103(b) of Title 49 of the United States Code mandates that the Secretary of the Department of Transportation (DOT) “prescribe minimum safety standards for designing, installing, constructing, initially inspecting, and initially testing a new liquefied natural gas pipeline facility”[21] and “prescribe minimum operating and maintenance standards for a liquefied natural gas pipeline facility.”[22] Does the word “minimum” imply that DOT does not enjoy exclusive authority over the safety of LNG import and export facilities?
Does any other provision in Title 49 work to vest exclusive authority over the operational safety of LNG facilities in DOT?
What weight should be given to the following excerpt of the legislative history for the Pipeline Safety Act of 1979, which amended the Natural Gas Pipeline Safety Act of 1968 to clarify the DOT authority over the operation of LNG facilities?
However, DOT has indicated that discussions between DOT and FERC have resumed with the purpose of developing a Memorandum of Understanding (MOU) formally setting forth a framework for coordination. A departmental spokesman testified that such an MOU should be completed within 1 or 2 months. Recognizing that the primary source of disagreement in the past has been over whether FERC shall retain its authority to impose safety requirements in addition to those imposed by DOT, the Committee anticipates that the MOU will resolve this question by a stipulation to the effect that, while FERC will retain its authority to impose safety conditions exceeding DOT’s standards, FERC will generally defer to those standards and exercise its authority only in exceptional cases and after consultation with DOT.
In the belief that coordination will be most successfully achieved by mutual agreement between the two agencies, the committee has not mandated any particular means of coordination. However, recognizing the problems which have developed as a result of an historical lack of coordination, the committee will closely monitor the development and implementation of an MOU. If the MOU or its implementation prove to be unsatisfactory, the committee will again consider legislative remedies.[23]
The Commission’s Briefing order finds that “EcoEléctrica has failed to demonstrate that the operation of the tank at a liquid level of 91 feet would not present an unacceptable risk to the public.”[24] Does DOT or Puerto Rico have the statutory authority to ensure the safe operation of EcoEléctrica’s LNG terminal?
In Distrigas Corp. v. FPC, the U.S. Court of Appeals for the District of Columbia Circuit found that “[s]ection 3 supplies the Commission not only with the power necessary to prevent gaps in regulation, but also with flexibility in exercising that power . . . .”[25] How does Distrigas inform the interpretation of “operation”?
Finally, I welcome information on other relevant authorities that I have not identified, and I appreciate the willingness of any party to assist in this jurisdictional inquiry.
For these reasons, I respectfully concur.
[1] EcoEléctrica, L.P., 177 FERC ¶ 61,164 (2021).
[2] 15 U.S.C. § 717b.
[3] EcoEléctrica, L.P., 176 FERC ¶ 61,192 (2021) (Danly, Comm’r, concurring at P 1) (Briefing Order).
[4] EcoEléctrica, L.P., 170 FERC ¶ 61,260 (2020) (Remedial Order).
[5] See Briefing Order, 176 FERC ¶ 61,192 (Danly, Comm’r, concurring at PP 2-5).
[6] Id. (Glick and Clements, Chairman and Comm’r, concurring at P 28).
[7] Id. (Glick and Clements, Chairman and Comm’r, concurring at P 1).
[8] See id. (Danly, Comm’r, concurring at P 7).
[9] See Memorandum of Understanding Between the Department of Transportation and the Federal Energy Regulatory Commission Regarding Liquefied Natural Gas Transportation Facilities (1985); see also Notice of Agreement Regarding Liquefied Nat. Gas, 31 FERC ¶ 61,232 (1985) (providing “notice that the attached Memorandum of Understanding has been signed by the Chairman of the Federal Energy Regulatory Commission and the Secretary of Transportation”).
[10] I am not the only one to have raised this concern. In the past, others have asked questions regarding FERC’s jurisdiction over LNG terminal safety. See S. Rep. 96-182, at 4 (1979) (“[T]he Committee held 2 days of hearings addressing several specific issues . . . . These issues included jurisdictional ambiguities between DOT and the Federal Energy Regulatory Commission.”). Cf. Chattanooga Gas Co., 51 F.P.C. 1278, 1280 (1974) (Brooke, Comm’r, dissenting) (“The thrust of Chattanooga’s arguments challenges the Commission’s assertion of authority to apply and enforce certain pipeline safety standards related to the operation of LNG facilities. Chattanooga is absolutely correct. . . . Nowhere in the Act, nor its legislative history, do I find any deviation from the exclusive and conclusive authority delegated by Congress to the Department of Transportation for the promulgation and enforcement of pipeline safety standards.”).
[11] Briefing Order, 176 FERC ¶ 61,192 (Danly, Comm’r, concurring).
[12] Id. (Glick and Clements, Chairman and Comm’r, concurring).
[13] Although the deadline for interventions has passed, that should not discourage interested parties who have not intervened from filing briefs in this docket.
[14] 42 U.S.C. § 7172(f) (“No function described in this section which regulates the exports or imports of natural gas or electricity shall be within the jurisdiction of the Commission unless the Secretary assigns such a function to the Commission.”); U.S. Department of Energy, Delegation Order No. 00-004.00A, § 1.21.A (May 16, 2006) (Delegation Order).
[15] See Mountain Valley Pipeline, LLC, 171 FERC ¶ 61,047, at P 21 n.62 (2020) (“We also note that the U.S. Department of Transportation’s Pipeline and Hazardous Material Safety Administration’s (PHMSA) has the exclusive authority to promulgate and enforce safety regulations and standards for ‘the design, installation, construction, initial inspection, initial testing, operation, and maintenance of facilities used in the transportation of natural gas.’”) (citation omitted).
[16] See Chattanooga Gas Co., 51 F.P.C. 1278.
[17] 15 U.S.C. § 717b(a).
[18] Id.
[19] Id. § 717b(e)(1).
[20] Id. § 717b-1(d) (emphasis added).
[21] 49 U.S.C. § 60103(b) (emphasis added).
[22] Id. § 60103(d) (emphasis added).
[23] S. Rep. 96-182, at 10; see also Jim Behnke, Safety Jurisdiction Over Natural Gas Pipelines, 19 Energy L.J. 71, 71-116 (1998).
[24] Briefing Order, 176 FERC ¶ 61,192 at P 28.
[25] 495 F.2d 1057, 1064 (D.C. Cir. 1974).