Statement of Commissioner James P. Danly
December 15, 2022
CP17-40-006
I agree with the reissuance of a certificate of public convenience and necessity to Spire STL Pipeline LLC.
There are several issues that have been recurring in the Commission’s recent Natural Gas Act (NGA) sections 7 and 3[1] issuances that appear in today’s order. I have written on these issues extensively.[2] I will not spill ink on them here; instead, there are three areas worthy of discussion: (1) project need; (2) the Commission’s finding that the downstream greenhouse gas emissions are reasonably foreseeable; and (3) the Commission’s decision to prepare an Environmental Impact Statement after the remand.
First, the most important question in this proceeding is project need. In fact, it was the Commission’s analysis of project need that was the basis of the U.S. Court of Appeals for the District of Columbia Circuit’s (D.C. Circuit) decision to vacate and remand the certificate issued to Spire STL Pipeline LLC.[3] As an initial matter, I agree with the court’s determination that we needed to look behind the precedent agreements in this case and I agree with the findings in the project need section of this order.[4] I would like to reiterate my view, however, that precedent agreements are strong evidence of need[5] and the Commission need not look further in most circumstances.
As I explained in my separate statement to the Commission’s now-draft Updated Certificate Policy Statement,[6] I agree that, as a legal matter, the Commission may take into account considerations other than precedent agreements in its need determination when there is an affiliate precedent agreement. And it was appropriate to do so in this case. I also agree that there may be circumstances—such as when there is evidence of self-dealing in the execution of a precedent agreement with an affiliated shipper—where “the existence of precedent agreements may not be sufficient in and of themselves to establish need for the project.”[7] But I disagree that the Commission must look beyond precedent agreements in every circumstance to determine need.
With regard to today’s order, the Commission barely acknowledges the precedent agreement and merely states that “Spire’s precedent agreement with Spire Missouri has been superseded by the execution of a long-term service agreement for 87.5% of the project’s firm transportation service”[8] and goes on to decide that “[i]t is unnecessary to decide what weight, if any, the Commission should have accorded the precedent agreement between Spire and Spire Missouri in issuing the original certificate for the Spire STL Pipeline.”[9] To the extent that it is suggested, I disagree with the idea that the precedent agreement should not be given any weight in this proceeding.
Nonetheless, I agree with the approach taken in this order and note that because we are examining the need for a project that is currently in operation, we have probative evidence of reliance on the subscribed capacity.
Second, I disagree with the Commission’s determination that “the emissions from the downstream combustion of the gas transported by the project are reasonably foreseeable emissions.”[10] The Commission is wrong. The facts here, like in Food & Water Watch v. FERC,[11] involve a project that is serving a local distribution company. And I recognize that the court “concluded that the end use of the transported gas is reasonably foreseeable.”[12] Nonetheless, the court also stated that “[o]n remand, the Commission remains free to consider whether there is a reasonable end-use distinction based on additional evidence, but it has not carried its burden before us at this stage,” and the court “remand[ed] to the agency to perform a supplemental environmental assessment in which it must either quantify and consider the project’s downstream carbon emissions or explain in more detail why it cannot do so.”[13] I am not convinced that the local distribution company involved here and the discrete, known generators at issue in Sierra Club v. FERC (Sabal Trail)[14] are similar enough that the Sabal Trail precedent directly applies. We have not yet acted on remand and, even according to the court, the question remains open. Additionally, as I have said before, Sabal Trail, upon which Food & Water Watch applies, is inconsistent with the Supreme Court’s holding in Department of Transportation v. Public Citizen (Public Citizen).[15] My views are not idiosyncratic. Both the partial dissenting statement in Sabal Trail and the Court of Appeals for the Eleventh Circuit agree.[16]
Finally, I do not think it was necessary for the Commission to have prepared an Environmental Impact Statement on remand. The court’s decision concerned project need and nothing in that decision calls into question the findings in the environmental document for the underlying certificate orders. The preparation of an additional environmental document only delayed Commission action in this proceeding.
For these reasons, I respectfully concur in the result.
[1] 15 U.S.C. §§ 717b, 717f.
[2] See, e.g., Gas Transmission Nw. LLC, 180 FERC ¶ 61,056 (2022) (Danly, Comm’r, concurring in the judgment at P 2) (discussing the breadth of the public convenience and necessity standard under the NGA); id. (Danly, Comm’r, concurring in the judgment at P 3) (stating that the Commission should repudiate the eye-ball test established in Northern Natural Gas Company, 174 FERC ¶ 61,189 (2021) (Northern)); id. (Danly, Comm’r, concurring in the judgment at P 3) (explaining that there is no standard by which the Commission could, consistent with our obligations under the law, ascribe significance to a particular rate or volume of greenhouse gas (GHG) emissions).
[3] See Env’t Def. Fund v. FERC, 2 F.4th 953, 976 (D.C. Cir. 2021) (holding that “it was arbitrary and capricious for the Commission to rely solely on a precedent agreement to establish market need for a proposed pipeline when (1) there was a single precedent agreement for the pipeline; (2) that precedent agreement was with an affiliated shipper; (3) all parties agreed that projected demand for natural gas in the area to be served by the new pipeline was flat for the foreseeable future; and (4) the Commission neglected to make a finding as to whether the construction of the proposed pipeline would result in cost savings or otherwise represented a more economical alternative to existing pipelines.”); id. (finding that “the Commission’s cursory balancing of public benefits and adverse impacts was arbitrary and capricious”).
[4] I am generally skeptical of affiliate transactions and think that in most circumstances, the Commission should scrutinize agreements with an affiliate. As I have previously explained, I agree with the D.C. Circuit’s decision to remand the Commission’s orders and the court’s explanation for doing so in Environmental Defense Fund v. FERC, 2 F.4th 953. See Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,107 (2022) (Danly, Comm’r, dissenting at P 13 n.46) (Updated Certificate Policy Statement).
[5] Certification of New Interstate Nat. Gas Pipeline Facilities, 88 FERC ¶ 61,227, at 61,748 (1999) (stating that precedent agreements “constitute significant evidence of demand”).
[6] Updated Certificate Policy Statement, 178 FERC ¶ 61,107 (Danly, Comm’r, dissenting at P 13). The Updated Certificate Policy Statement was converted to a draft on March 24, 2022. See Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,197, at P 2 (2022).
[7] Updated Certificate Policy Statement, 178 FERC ¶ 61,107 at P 54.
[8] Spire STL Pipeline LLC, 181 FERC ¶ 61,232, at P 28 (2022).
[9] Id. P 39.
[10] Id. P 101.
[11] 28 F.4th 277 (D.C. Cir. 2022) (Food & Water Watch).
[12] Id. at 289.
[13] Id. (emphasis added).
[14] 867 F.3d 1357 (D.C. Cir. 2017).
[15] 541 U.S. 752, 767 (2004) (“NEPA requires ‘a reasonably close causal relationship’ between the environmental effect and the alleged cause. The Court analogized this requirement to the ‘familiar doctrine of proximate cause from tort law.’”) (citation omitted).
[16] See 867 F.3d at 1383 (Brown, J., concurring in part and dissenting in part) (“Thus, just as FERC in the [Department of Energy] cases and the Federal Motor Carrier Safety Administration in Public Citizen did not have the legal power to prevent certain environmental effects, the Commission here has no authority to prevent the emission of greenhouse gases through newly-constructed or expanded power plants approved by the Board.”); Ctr. for Biological Diversity v. U.S. Army Corps of Eng’rs, 941 F.3d 1288, 1300 (11th Cir. 2019) (“[T]he legal analysis in Sabal Trail is questionable at best. It fails to take seriously the rule of reason announced in Public Citizen or to account for the untenable consequences of its decision.”).