Commissioner James Danly Dissent Regarding Algonquin Gas Transmission, LLC

Commissioner James Danly Statement
May 19, 2021
Docket No. CP16-9-014

I dissent from today’s order dismissing the parties’ requests for rehearing of the Commission’s Order Establishing Briefing (Briefing Order)[1] as premature.[2] 

Section 19(a) of the Natural Gas Act (NGA) permits any person “aggrieved by an order issued by the Commission” to which it is party to apply for rehearing.[3]  The majority argues that the parties are not aggrieved by characterizing the Briefing Order as “interlocutory” and as initiating a “fact-finding process[] to develop a record to inform future final action.”[4]  The Briefing Order is not at all an interlocutory order in its ordinary sense.  It is not a preliminary step in a proceeding that the Commission is authorized to initiate.  It asks questions (for which the Commission had no authority to ask) that directly affect determinations made in a final, non-appealable certificate order.  Those questions mean that the determinations are not in fact settled and the final, non-appealable certificate order is in fact no longer final. 

As I explain in more detail below, whether the Commission later modifies the certificate order, or finds it has no authority to do so, is irrelevant.  The parties have been aggrieved.  Moreover, good governance demands that the Commission respond to the jurisdictional arguments raised now before continuing with its proceeding.

Parties are Aggrieved

The parties are aggrieved as they suffered the present and immediate injury of the reopening of a final, non-appealable certificate order.  

The Briefing Order Reopened the Certificate

The Briefing Order reopened the certificate proceeding for the Atlantic Bridge Project to consider the emissions and operational safety at the Weymouth Compressor Station.  Only by reopening the certificate proceeding can the Commission “reconsider the current operation of the Weymouth Compressor Station,” consider “changes in . . . projected air emissions impacts or public safety impacts,” ask whether “additional mitigation measures” should be imposed, or consider “stay[ing] or revers[ing] the Authorization Order.”[5]  My belief that the Briefing Order re-opens the certificate is not an idiosyncratic reading.[6]  I will explain in more detail why that must be the case, but to reassure my audience that I am not alone in this view, it is worth pointing out that a bipartisan group of seven former commissioners appointed by every president since President Reagan agree with me, stating in a letter to the Commission that: “[i]n this proceeding, the Commission has effectively reopened the record many years after it authorized construction of facilities and denied rehearing requests . . . .”[7]

The majority denies that it is the case, clarifying that the Briefing Order “is not a reopening of the Commission’s order”[8] but “merely initiates a fact-finding proceeding as an exercise of the Commission’s continuing oversight of the Project.”[9]  The majority does not elaborate on what “exercis[ing] . . . the Commission’s continuing oversight of the Project” means or its origins.[10]  And for good reason.  It has no basis in the NGA or Commission precedent.[11] 

NGA section 7(e) authorizes the Commission “to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.”[12]  The legal consequence of this provision of the NGA is clear: the legal obligation to mitigate anything can originate only from the terms of a certificate.  It is with the issuance of a certificate that the conditions are established.  Put another way, the Commission is powerless to order a pipeline to take any action outside the scope of the requirements established in the conditions attached to its certificate.  The only way to consider establishing new requirements is to reopen the certificate proceeding to add additional conditions, and such conditions can only be created by amending the certificate. 

None of the conditions attached to the certificate allow for the establishment of “additional mitigation measures.”[13]  To the extent the majority’s clarification attempts to argue that the issuance of the Briefing Order falls under Environmental Condition No. 2 of the Certificate Order, such argument is unavailing.  Environmental Condition No. 2 is a standard term that delegates to the Director of the Office of Energy Projects (OEP) the authority to “take whatever steps are necessary to ensure the protection of all environmental resources during construction and operation of the Project.”[14]  Reliance on Environmental Condition No. 2 to impose “additional mitigation” would contravene its unambiguous purpose.  In 1995, shortly after the Commission began adding this condition to its certificate orders, the Commission clarified that

Condition 2 is intended to give the Director authority to enforce the terms and conditions of the certificate order.  It is not intended to give the Director of [OEP] authority to take unrelated actions throughout the life of the project.  Rather, it is intended to give the Director authority to ensure that [the pipeline] complies with the environmental conditions and, if necessary, to modify these conditions in order to ensure National Environmental Policy Act (NEPA) compliance.  It is also intended to provide expeditious resolution of unanticipated environmental situations the applicant may encounter during the construction and restoration of the project.[15]

The Commission has not departed from this interpretation.[16]  The only applicability of Environmental Condition No. 2 in this case, would be if Algonquin’s operation of the Weymouth Compressor Station were inconsistent with the terms of the Certificate Order.      

That is not the case.  The most relevant term and condition is Ordering Paragraph (A), which provides that “[a] certificate of public convenience and necessity is issued authorizing Algonquin and Maritimes to construct and operate the Atlantic Bridge Project, as described in this order and in their application.”[17]  For air emissions, the Certificate Order states:     

Air impacts from blowdowns are addressed throughout the EA, providing an estimate of emissions, explaining that methane is non-toxic and buoyant (dispersing rapidly in air), and summarizing a past health risk assessment performed on a similar facility.  We find that air impacts from operation of the compressor station and blowdown events have been adequately addressed.[18]

The blowdown events totaled 0.34 percent of the annual total fugitive volatile organic compounds estimated by the Commission.[19]  For safety, the Certificate Order states, “Algonquin has committed to design, install, inspect, test, construct, operate, replace, and maintain the [Weymouth Compressor Station] in accordance with [Pipeline and Hazardous Materials Safety Administration (PHMSA)] safety standards.”[20]  The blowdown events occurred in compliance with PHMSA safety standards.[21]  Given that Algonquin’s operations comply with the Certificate Order, there is no term or condition for the Director of OEP to enforce.  

To the extent that the majority believes it is part of its “continuing oversight” to find that it is in the public interest for the project to be placed in service and may also consider whether additional conditions or mitigation measures are necessary and appropriate pursuant to that authorization,[22] no provision in the NGA supports this claim.  The Certificate Order found the operation of the Weymouth Compressor Station to be in the public convenience and necessity.[23]  Any reconsideration of that finding constitutes a re-opening of the certificate proceeding.  Moreover, Environmental Condition No. 10 of the Certificate Order sets forth the requirements for placing the compressor station into service:  that Algonquin “receive written authorization from the Director of OEP” in which would “only be granted following a determination that rehabilitation and restoration of the right-of-way and other areas affected by the Project are proceeding satisfactorily.”[24]  The sole predicate for issuance of an authorization is a determination that restoration has occurred.  Environmental Condition No. 10 includes no language authorizing the Commission to add new conditions or mitigation measures as further requirements for Algonquin to receive its in-service authorization.  And only by reopening the certificate proceeding can the Commission consider establishing additional conditions. 

Injury is Present and Immediate

The parties are “aggrieved” as their injury is “present and immediate.”[25]  Because the Commission reopened the Certificate Order, Algonquin must now re-litigate issues evaluated and conclusively resolved in the certificate proceeding completed over four years ago and upheld on appeal.  Moreover, the reopening of the certificate eviscerated the finality and regulatory certainty of all existing and future Commission certificates, destabilizing the entire natural gas supply chain from the wellhead to the burner tip.  No longer does a final certificate mean it is in fact “final.”  Without such certainty, pipeline investment will chill and risk premiums will increase, making it more difficult and costly to finance projects (including projects to modernize existing lines) to reliably transport gas at reasonable prices.  Surely this is not the intended purpose.  Regardless of intention, that will be the effect: to make the financing so onerous that capital cannot be secured and pipelines will no longer file applications for certificates for new facilities but for authorizations to abandon existing ones.

These harms are felt universally.  Shippers now face unknowable project risks affecting their ability to commit to precedent agreements and subscribe for service.  And with the chill in pipeline investment and inability to build infrastructure, shippers will inevitably face pipeline constraints and rising prices all of which will be born, ultimately, by consumers, including the nearly half of American households that depend on gas.[26]  These are present and immediate harms.[27]    

Commission’s Arguments are Unpersuasive or False

The Commission makes three main points to argue that the parties are not aggrieved, each of which is unpersuasive or false.  First, the Commission argues that the parties’ claims are “unsupported” or “generalized.”[28]  It is obvious that the Commission’s act of reopening a final certificate has destabilized project fundamentals, will cause risk premium for pipelines to increase, and will make it more difficult and expensive to finance projects.  The courts have recognized the importance of finality for investment.[29]  And a review of the initial comments filed shows that these effects are real.[30]  There is no need for substantiation or affidavits for something that is apparent.   Such facts are amenable to judicial and administrative notice.

Second, the Commission appears to argue that the courts have found being subject to an adjudicatory process does not constitute irreparable injury.  The Briefing Order, however, is not an adjudicatory process akin to the proceedings at issue in the cases that the Commission cites.  It is unlike NGA section 4 orders accepting and setting rates for hearings that do not decide Mobile-Sierra claims.[31]  It is unlike NGA section 5 show cause orders.  It is unlike NGA section 10 orders initiating investigations.[32]  All of those proceedings are within the Commission’s authority to undertake and are “part of the social burden of living under government.”[33]  Whereas the Briefing Order is not.  The Briefing Order, contrary to over 80 years of precedent, reopened the record of a judicially final certificate order without any demonstration that a statute conferred on the Commission that power.[34] 

Finally, the Commission argues that the parties’ “claimed harms are based on speculation regarding potential action that the Commission could take, rather than any action the Commission has actually taken.”[35]  This is plainly false.  The parties each allege they are harmed based on the Commission’s reopening of the final order, making the final order no longer final, an action that the Commission has actually taken. 

Reviewability of Rehearing Requests

By analogy, the Briefing Order is immediately appealable like the orders deciding Mobile-Sierra claims.[36]  Courts consider whether the agency decision is conclusive, causes irreparable injury, and interferes with agency discretion.[37]   

The Briefing Order is final to the extent that it definitively resolves the issue whether the majority has the authority to reopen a final certificate proceeding to consider modifying its terms.  The majority never reserved for later disposition the issue of whether it has the authority to reopen a final order.[38]  The majority asks no questions or expresses doubt regarding its authority.  And the majority is not budging from its position.     

The Briefing Order has irremediable consequences.  With having a final certificate order, no longer subject to appeal, comes the entitlement that the pipeline no longer has to re-litigate whether its project is in the public convenience and necessity.  That entitlement is effectively lost if the Commission were allowed to continue reopening the final certificate orders and subjecting the pipeline to post-adjudication review of an adjudication that has already taken place.  Such unprecedented and surprise post-adjudications are not the type of litigation that “is ‘part of the social burden of living under government.’”[39]  Nor can the consequence of reopening a certificate be remedied upon review of the final order that comes out of the Briefing Order.

Finally, there is no reason for the Commission to wait until the proceeding established by the Briefing Order is complete.  Again, the majority asked no questions regarding the Commission’s authority.  The question of whether the Commission has the authority to reopen a certificate order is separate from the majority’s questions on whether and how should the Commission modify the terms of a certificate order.   

Good Governance Demands Responding to Rehearing Requests

It also would be wise of the Commission to respond to the arguments that the Commission lacks the authority to reopen a final certificate order.  In fact, it is incumbent upon the Commission to do so at some point.[40]  Why wait until tomorrow when you have an opportunity to do so today?

Especially when this explanation would benefit all parties.[41]  What party wants the Commission to state that their safety and environmental concerns “warrant further consideration,” encourage them to labor over initial and reply comments, and then to be later told the Commission lacked the authority to reopen the record and cannot modify the certificate to address their concerns?  Those parties will undoubtedly criticize the Commission for its mismanagement, waste, and deception.  There will be no applause for giving those parties an additional opportunity to participate.  The majority will simply have harassed a pipeline without any benefit.

The seven former commissioners have advised the Commission to terminate the proceeding.[42]  I agree.  

For these reasons, I respectfully dissent.