Commissioner James Danly Statement
August 31, 2023
Docket No. RP23-939-000
DANLY, Commissioner, concurring in the result:
I concur in the result of accepting and suspending National Fuel Gas Supply Corporation’s (National Fuel) tariff revisions, subject to refund and the outcome of hearing procedures[1] which may help resolve the question of whether the terms of National Fuel’s tariff revisions are overexpansive.[2] I write separately to admit my bewilderment at the submissions of some of the shippers who have filed comments seeking to challenge cost recovery for expenses directly traceable to policy initiatives those same shippers have actively and publicly supported.[3] While—of course—these shippers are entitled to file before the Commission and protest anything they like, they should be aware that, at least from my point of view, they do so having thoroughly ceded the moral high ground.
To offer a couple of examples, Equinor Natural Gas, LLC (Equinor) has actively and publicly supported the imposition of mandatory methane reduction regimes upon pipelines,[4] yet Equinor challenges the pipeline’s request for cost recovery for its compliance with such regimes.[5] Tenaska Marketing Ventures filed a joint protest as part of the National Fuel Shipper Group, which “protests all aspects of the Application.”[6] Yet, Tenaska Inc. filed joint comments in a proceeding before the Environmental Protection Agency (EPA) urging regulation of methane by EPA from new sources in the oil and natural gas source category.[7]
It has become fashionable for oil and gas companies, not to oppose, but to advocate for greater regulation that could expose the industry to enormous compliance costs. Now, as the costs are coming due, I find it difficult to muster sympathy for the protestors who bear (in part) the responsibility for the enactment of the policies that impose the very costs they now seek to avoid.[8] But I do admire the chutzpah.
For these reasons, I respectfully concur in the result.
James P. Danly
Commissioner
[1] See Nat’l Fuel Gas Supply Corp., 184 FERC ¶ 61,127 (2023).
[2] But see infra note 8.
[3] Compare Equinor Natural Gas, LLC & EnergyMark, LLC August 14, 2023 Joint Protest & Request for Evidentiary Hearing & Maximum Suspension at 9-10 (arguing that National Fuel has not demonstrated that National Fuel’s proposed revisions to its “Pipeline Safety and Reliability and Greenhouse Gas Cost Recovery Mechanism” are just and reasonable and asserting that “[i]f not rejected outright, at a minimum, the proposed PSR/GHG Mechanism should be examined in detail through discovery and subjected to close scrutiny in an evidentiary hearing”) (Equinor & EnergyMark Joint Protest), with Equinor US (@Equinor_US), Twitter (Apr. 9, 2021, 4:07 p.m.), https://twitter.com/Equinor_US/status/1380613455632273421 (“Ensuring that natural gas continues to provide climate benefits means reducing emissions from its production. We support the methane resolution under the Congressional Review Act. Direct federal methane regulation is an important step on the pathway to net-zero.”). Cf. Equinor, Reducing Methane Emissions, https://www.equinor.com/sustainability/reducing-methane-emissions (last visited Aug. 31, 2023) (“Methane emissions are the second-largest contributor to global warming and account for almost a quarter of the increase in global temperatures. Methane has a greater warming potential than CO2 in the atmosphere, but it also has a much shorter lifetime compared to CO2. Rapidly reducing methane emissions is therefore one of the most effective short-term measures for addressing climate change.”) (emphasis added); id. (“We aim to reduce the methane intensity from our oil and gas operations to near zero by 2030. We are on track, but constantly looking for ways to improve. We do this by: . . . supporting industry efforts to reduce methane emissions across the oil and gas value chain [and] . . . supporting the development of sound methane policies and regulations.”) (emphasis added); National Gas Supply Association, Methane Reduction, https://www.ngsa.org/methane-reduction/#:~:text=Equinor%20%E2%80%93%20Equinor%20supports%20methane%20regulations%20in%20the,Equinor%20reduced%20their%20US%20methane%20emissions%20by%2080%25 (last visited Aug. 31, 2023) (“Equinor supports methane regulations in the U.S. at the federal level and is utilizing innovative technical solutions, like methane ‘sniffing’ drones to identify and address methane emissions. Between 2014 and 2018, Equinor reduced their [U.S.] methane emissions by 80%.”) (emphasis added).
[4] See, e.g., Equinor & EnergyMark Joint Protest at 5 (explaining that “[e]ligible costs would explicitly include costs to comply with the Pipes Act of 2020 and the Pipeline and Hazardous Material Safety Administration’s ‘gas mega rule,’ [Underground Natural Gas] Storage [Facilities] Final Rule, and [Rupture Mitigation Valves] rule. Greenhouse gases would now include nitrogen oxides and volatile organic compounds as well as costs incurred to comply with the Inflation Reduction Act, the Environmental Protection Agency’s Good Neighbor Rule, and New York’s Climate Leadership and Community Protection Act.”) (citation omitted); see also id. at 9-10.
[5] See id. at 9-10 (“National Fuel has failed to demonstrate the justness and reasonableness of its proposed revisions to the Pipeline Safety and Reliability and Greenhouse Gas Cost Recovery Mechanism.”).
[6] National Fuel Shipper Group August 14, 2023 Joint Protest at 1. The members of the National Fuel Shipper Group are J. Aron & Company, Sequent Energy Management, L.P., Spotlight Energy, LLC and Tenaska Marketing Ventures.
[7] See Austin Energy, et al., Joint Comments regarding EPA’s Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review, Docket ID No. EPA–HQ–OAR–2017–0757, at 2 (Nov. 25, 2019), https://www.regulations.gov/comment/EPA-HQ-OAR-2017-0757-2163 (“EPA should continue to directly regulate methane from new sources in the oil and natural gas source category. . . . The importance of controlling these emissions is clear when considering that the oil and natural gas source category is the largest source of anthropogenic methane emissions in the U.S., contributing 31 percent of U.S. methane emissions in 2017 according to EPA’s Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990- 2017 (published in 2019).”) (citation omitted).
[8] I have misgivings, however, with parts of Section 42 of the General Terms & Conditions (GT&C) of National Fuel’s tariff, including parts of the version in National Fuel’s existing tariff and of the proposed revision. GT&C Section 42 of National Fuel’s currently effective tariff provides a “Pipeline Safety and Greenhouse Gas Cost Adjustment Mechanism.” Among other revisions to Section 42 of the GT&C of its tariff, National Fuel revised the heading of that section to read “Pipeline Safety and Reliability and Greenhouse Gas Cost Adjustment Mechanism.” My concern is as follows: to the extent to which either National Fuel’s currently-effective Section 42 tariff provision, in particular Section 42.2(g), or the version of that provision as revised in this tariff filing, include costs associated with voluntary measures such as the acquisition or production of renewable energy credits, greenhouse gas allowances and offsets, or any other climate change related programs that are not the result of a statutory or regulatory requirement, I am concerned that the provision is too broad and not just and reasonable. Because it is both the language in the existing tariff as well as the revisions in the filing at issue here that are too broad and, perhaps, not just and reasonable, I harbor doubts that setting the tariff revisions for hearing will settle the matter. Instead, since this problem extends to language in the existing tariff, shippers who oppose this tariff mechanism should consider initiating an NGA section 5 complaint. See 15 U.S.C. § 717d.