February 17, 2022
E-1, Implementation of Dynamic Line Ratings
There is a lot on the docket and I do not want us to lose sight of the importance of Item E-1, the dynamic line rating inquiry, so thank you, Chairman, for taking the time to explain what is contained in this important effort. We are launching this notice to develop a record on the potential for dynamic line ratings to effectively support reliability and save customers money. I have been encouraged in what I have reviewed for the potential of dynamic line ratings to significantly improve the efficiency of the transmission system, and I hope this opportunity will facilitate stakeholders to build on this starting point and provide next-level detail on what cost implementation details of dynamic line ratings may look like. I look forward to engaging in this docket.
Presentation Items
C-1, Certification of New Interstate Natural Gas Facilities
Thank you, Chairman Glick, and thank you to Brandon Cherry, Paige Espy, and Karin Larson for their presentations on the policies we are voting on today. I am pleased to vote for Item C-1 today. It is an important step toward establishing a framework for making wise and legally durable decisions that account for the complexities of an energy system undergoing profound transformation.
As Brandon mentioned in his presentation, the goals and objectives of the updated certificate policy statement are consistent with the goals of the 1999 policy statement. The updated policy incorporates much of the content from its predecessor, but it improves on areas where the Commission’s decision-making is falling short. I want to talk about three of these improvements.
First, the policy statement provides for a full analysis of project need as a gating question, rather than a check-the-box exercise relying solely on the existence of precedent agreements. Since the issuance of the 1999 policy statement, the Commission’s need inquiry has devolved into a superficial determination of whether the project sponsor has entered into precedent agreements. The new policy rectifies this deficiency. It sets forth a need determination framework that provides guidance to the project sponsor and other parties on the evidence the Commission will consider in objectively assessing project need. The framework allows for consideration of important reliability and other benefits a project may offer, while ensuring that factors weighing against claimed benefits, that are provided on the record, get considered.
Second, the revised policy statement calls on the Commission to consider all factors bearing on the public interest, as the Natural Gas Act requires and as courts have directed us to do. The policy makes clear that impacts on the environment, landowners, and environmental justice communities should be considered alongside economic factors in the public interest determination, and not be relegated to an afterthought. This improvement embraces two realities: one, that the public interest standard by its nature must answer to the needs of the public today rather than what they were decades ago; and two, that irrespective of whether any member of this Commission agrees with relevant court precedent, it is binding.
Third, the new policy is forward-looking. It calls on the Commission to consider market trends, as well as policy and regulatory developments, affecting the need for the project, currently and into the future.
I want to talk about what the updated certificate policy statement does not do. The policy statement does not contravene the purpose of the Natural Gas Act. It does not turn the Commission into an environmental regulator. And it does not represent a radical departure from well understood and legally enshrined Commission Natural Gas Act and NEPA practices.
In my time as Commissioner, I have consistently urged fidelity to statutory language and governing case law. The certificate policy statement discusses the Commission’s legal authority and obligations at length, and I will not repeat them here. But a few points bear emphasis:
Section 1 of the Natural Gas Act declares, as Commissioner Danly stated, that natural gas regulation is “affected with a public interest.” Section 7 instructs that certifications only be approved following a determination of present or future public convenience and necessity. These provisions charge the Commission with considering the need for a proposed project alongside the other factors affecting the public interest.
The Supreme Court has interpreted the NGA’s purpose as encouraging “the orderly development of natural gas supplies.” This interpretation cannot be the stretched to command reflexive approval of every natural gas infrastructure proposal brought before the Commission. Nor are those words a license to ignore a project’s adverse impacts on consumers, the environment, environmental justice communities, and landowners. The private capital that Commissioner Danly speaks about is important, but it is not the only thing at risk in certificate decisions; the Natural Gas Act requires the Commission to fully consider the public interests at stake.
Further, there is nothing remarkable – and certainly not “radical” – in taking environmental considerations into account while determining the public interest. The Commission has done so for years. The climate change effects of a project are one more, if uniquely harmful, adverse impact that the Commission must consider in balancing a project’s benefits against its drawbacks, as the revised policy statement provides.
This is an important point. There is a suggestion in one of the dissents that the revised policy statement suggests the Commission will deny a project that is otherwise in the public interest based on climate change impacts. As Chairman Glick explained, the policy does not call on the Commission to regulate GHG emissions. Instead, a project’s potential climate change impacts and any proposed greenhouse gas mitigation measures will be taken into account as part of the Commission’s improved public interest consideration.
C-2, Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews
As I transition to C-2, let me state something obvious. Climate change is a threat to our society and causes disproportionate harm to environmental justice communities. Where a proposed project will cause reasonably foreseeable significant climate impacts, the certificate and GHG policies together now provide the framework for consideration of those impacts and their mitigation.
A few observations about the interim GHG policy statement:
First, project sponsors have sought greater clarity from the Commission on when it will require an Environmental Impact Statement rather than an Environmental Assessment under NEPA based on the GHG emissions associated with a proposed project. It is helpful for us to provide that guidance today. The interim policy establishes a clear numerical threshold of annual GHG emissions triggering the preparation of an Environmental Impact Statement.
Second, the interim policy also elaborates on how we will factor GHG emissions into our public interest determinations under the Natural Gas Act. It does not call for the Commission to regulate GHG emissions. The policy encourages, but does not require, project sponsors to implement measures to mitigate GHG emissions. Many natural gas and LNG companies have pledged to reduce their GHG emissions voluntarily and this policy aligns with those goals.
A final note on these two policy statements. As I’ve said, industry certainty is an important component of regulatory balance and it is something I strive for in the Commission’s work. Today’s issuance starts us down a path towards that increased certainty. The reality of a policy statement is that it is a framework for decision-making. We will build a body of binding precedent applying this policy to individual cases and I encourage continuing stakeholder engagement as we do so. The policy provides for a balanced consideration of project benefits and harms. It does not foreshadow, let alone dictate, the outcome for any given certificate application. But the desire for near-term, and near-continuous, industry certainty cannot be elevated above all else in what is a necessarily complicated and evolving regulatory reform.
With that, I want to thank the commenters in both dockets. There has been a lot of work done, and I want to thank my colleagues and staff who have worked incredibly hard on these issues. I look forward to continuing engagement on these issues.