Commissioner Richard Glick Statement
September 3, 2020
Docket No. CP16-22-005, CP16-23-003, CP16-24-002, CP16-102-002
Order
I join much of today’s order on remand from the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). In reviewing the Commission’s earlier order in this proceeding, the court held that the Commission inadequately explained its finding that the NEXUS pipeline (Project) was needed.[1] The court directed the Commission to explain on remand why “it is lawful to credit precedent agreements with foreign shippers serving foreign customers toward a finding that an interstate pipeline is required by the public convenience and necessity under Section 7 of the” Natural Gas Act (NGA).[2]
In responding to that remand, the Commission makes three findings. First, that it is appropriate to consider precedent agreements with shippers that plan to transport natural gas for export when evaluating whether a project is needed as part of the Commission’s consideration of the public convenience and necessity. Second, that an NGA section 7[3] certificate of public convenience and necessity constitutes a public use sufficient to satisfy the Takings Clause of the Fifth Amendment to the U.S. Constitution. And third, that the Project would be still be needed even without considering the precedent agreements that support export to Canada. I concur in these conclusions in part and dissent in part.
First, a little background. In July 2018, I dissented from the Commission’s order denying rehearing of its decision to award NEXUS Gas Transmission, LLC (NEXUS) a certificate of public convenience and necessity.[4] In my view, the Commission’s determination on rehearing had two fundamental flaws. First, it did not adequately explain why the Project was needed.[5] In particular, I disagreed with the Commission’s conclusory reliance on the presence of precedent agreements (including agreements among affiliated entities) and its one-sided recitation of the evidence regarding the demand for natural gas in the region. As I explained, the Commission pointed to what it described as “evidence of growing demand” for natural gas in the region, while, at the same time, refusing to consider contrary evidence, including detailed studies submitted to the record.[6] That issue remains germane to this proceeding given the Commission’s finding today that there is a need for the project. Second, I believed—and continue to believe—that the Commission’s cursory refusal to consider the Project’s contribution to climate change was arbitrary and capricious.[7] Nevertheless, no party contested the Commission’s assessment of the Project’s greenhouse gas emissions on appeal and that issue is not within the scope of the court’s remand.
With that, let’s turn to the merits of this proceeding. On the first issue, I agree that precedent agreements with shippers that plan to transport natural gas for export can be used as evidence to help demonstrate the need for a proposed project.[8] I put great weight on Congress’s legislative determination that exports of natural gas to free trade countries, including Canada, are consistent with the public interest.[9] Because Congress has seen fit to deem those exports to be consistent with the public interest, it makes sense that a precedent agreement to facilitate those exports can, at least under certain circumstances, help support a finding of need for a proposed pipeline.[10]
Furthermore, as the Commission explains, the interstate transport of natural gas—whether for export or domestic consumption—provides a variety of “public benefits,”[11] which are appropriate to consider in evaluating whether a proposed project may be required by the public convenience and necessity. Those benefits include the fact that the “production and sale of domestic gas contributes to the growth of the economy and supports domestic jobs in gas production, transportation, and distribution.”[12] In addition, the Commission explains that the export of natural gas to Canada can support the development of vibrant cross-border markets for natural gas, which the record before us indicates can benefit U.S consumers in the Great Lakes region, New York, and New England.[13] In my view, the key point here is that the Commission is taking a broad view of the benefits that a pipeline can provide in justifying why precedent agreements for natural gas that will ultimately be exported are relevant to the public convenience and necessity. I continue to believe that such a holistic approach to evaluating the need for and benefits of a proposed pipeline—rather than a myopic focus on precedent agreements—is the right approach and more consistent with our statutory mandate. I see no reason why we should take such a broad view of that evidence only when questioned by a court and not in our ordinary assessment of the need for a proposed pipeline.[14]
The Commission also makes the alternative finding that the Project is needed even without considering the precedent agreements that support export to Canada. I cannot join this conclusion because it continues to take a one-sided view of the record and ignores critical pieces of evidence. As an initial matter, I am pleased to see that the Commission’s alternative holding does not repeat its usual finding that the existence of precedent agreements is, by itself, sufficient to show that the Project is needed.[15] As I have previously explained, including in my earlier dissent in this proceeding, exclusive and unquestioning reliance on precedent agreements (especially those among affiliates) in the face of contrary evidence, is not an appropriate way to evaluate the need for a new pipeline.[16] In its alternative finding in today’s order, the Commission recognizes that its certificate policy statement contemplates the consideration of other evidence besides precedent agreements.[17] And it then proceeds to do exactly that, pointing to the project’s potential to alleviate bottlenecks in transportation and diversify supplies of natural gas in the upper Midwest.[18] Those types of benefits ought to be considered and I strongly support this more comprehensive approach to assessing the need for the Project. Fully developed, it could lead to greater consensus on this important aspect of the certification process.
That being said, I dissent in part from the Commission’s continued finding of need because it relies heavily on the notion that the Project is needed because it will “enhance the pipeline grid and ensure access to future domestic energy supplies.”[19] That truism could describe nearly every project that the Commission certificates. If the benefit of new pipeline capacity is that it will provide new pipeline capacity, then the Commission’s assessment of need is little more than a circular “check-the-box” exercise. Instead, if the Commission is going to consider the value of excess capacity as a benefit that justifies the need for a project, then common sense and reasoned decisionmaking require that the Commission at least attempt to assess whether there will at some point be a demand for that capacity.
At no point in this proceeding has the Commission undertaken such an assessment. As I explained in my earlier dissent on rehearing, in considering this question, “the Commission selectively point[ed] to evidence of expected demand only in instances where it backs the Commission’s [finding of need].”[20] At the same time, the Commission refused to consider the evidence suggesting that demand for the additional capacity is unlikely to materialize.[21] That is arbitrary and capricious. An agency may not consider only the evidence supporting its position and ignore the evidence that cuts in the other direction.[22] Accordingly, because the Commission refuses to more thoroughly consider the determination of need in today’s order, I cannot join the Commission’s finding that the Project is needed.
For these reasons, I respectfully concur in part and dissent in part.
[1] City of Oberlin v. FERC, 937 F.3d 599, 606-08 (D.C. Cir. 2019); NEXUS Gas Transmission, LLC, 172 FERC ¶ 61,199, at P 9 (2020) (Order).
[2] City of Oberlin, 937 F.3d at 607-08.
[3] 15 U.S.C. § 717f.
[4] NEXUS Gas Transmission, LLC, 164 FERC ¶ 61,054 (2019) (Glick, Comm’r, dissenting).
[5] Id. (Glick, Comm’r, dissenting at 2-4).
[6] Id. (Glick, Comm’r, dissenting at 4).
[7] Id. (Glick, Comm’r, dissenting at 4-11); see also id. (LaFleur, Comm’r, dissenting) (dissenting from the Commission’s assessment of the Project’s greenhouse gas emissions).
[8] Order, 172 FERC ¶ 61,199 at P 12.
[9] 15 U.S.C. § 717b(c); see Sierra Club v. U.S. Dep’t of Energy, 867 F.3d 189, 192-93 (D.C. Cir. 2017).
[10] As I have previously explained, I do not agree with the Commission’s policy of treating precedent agreements as being sufficient to establish need in the face of evidence to the contrary. See generally, e.g., Spire STL Pipeline LLC, 169 FERC ¶ 61,134 (2019) (Glick, Comm’r, dissenting at P 3) (dissenting on the basis that “[w]hatever probative weight [an affiliate precedent] agreement has, the Commission cannot simply point to the agreement’s existence and then ignore the evidence that undermines the agreement’s probative value”). But my belief that a precedent agreement will not always be conclusive evidence of demand does not mean that it cannot sometimes constitute evidence in support of need.
[11] Order, 172 FERC ¶ 61,199 at P 18.
[12] Id.
[13] Id. P 19.
[14] Cf. Certification of New Interstate Nat. Gas Pipeline Facilities, 88 FERC ¶ 61,227, 61,747 (1999) (“[T]he Commission will consider all relevant factors reflecting on the need for the project. These might include, but would not be limited to, precedent agreements, demand projections, potential cost savings to consumers, or a comparison of projected demand with the amount of capacity currently serving the market.”).
[15] Order, 172 FERC ¶ 61,199 at P 24 (observing that the domestic precedent agreements are sufficient to support a finding of need for the Project “[g]iven the circumstances of this case”).
[16] E.g., NEXUS Gas Transmission, LLC, 164 FERC ¶ 61,054 (Glick, Comm’r, dissenting at 2-4); see generally Spire STL Pipeline LLC, 169 FERC ¶ 61,134 (Glick, Comm’r, dissenting) (providing a broader discussion of the concerns with affiliated precedent agreements). Although the Commission emphasizes the court’s conclusion in City of Oberlin, that it was not unreasonable to rely on precedent agreements, Order, 172 FERC ¶ 61,199 at P 8, the court expressly caveated its conclusion on the basis that the petitioners did not attempt to raise evidence calling that reliance into question, see City of Oberlin, 937 F.3d at 605; see also Spire STL Pipeline LLC, 169 FERC ¶ 61,134 (Glick, Comm’r, dissenting at P 15 & n.32) (discussing this aspect of City of Oberlin).
[17] Order, 172 FERC ¶ 61,199 at P 25.
[18] Id. P 25.
[19] Id.
[20] NEXUS Gas Transmission, LLC, 164 FERC ¶ 61,054 (Glick, Comm’r, dissenting at 4).
[21] Id. (Glick, Comm’r, dissenting at 4).
[22] See Genuine Parts Co. v. EPA, 890 F.3d 304, 312 (D.C. Cir. 2018) (“[A]n agency cannot ignore evidence that undercuts its judgment; and it may not minimize such evidence without adequate explanation.”); id. (“‘Conclusory explanations for matters involving a central factual dispute where there is considerable evidence in conflict do not suffice to meet the deferential standards of our review.’” (quoting Int’l Union, United Mine Workers v. Mine Safety & Health Admin., 626 F.3d 84, 94 (D.C. Cir. 2010)); see also Lakeland Bus Lines, Inc. v. NLRB, 347 F.3d 955, 962 (D.C. Cir. 2003) (explaining that a court “may not find substantial evidence ‘merely on the basis of evidence which in and of itself justified [the agency’s conclusion], without taking into account contradictory evidence or evidence from which conflicting inferences could be drawn’” (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951)).