Commissioner James Danly Statement
April 21, 2022
Docket No. CP20-27-000
I concur in the issuance of a Natural Gas Act (NGA) section 7(c)[1] certificate of public convenience and necessity to North Baja Pipeline, LLC’s (North Baja), authorizing the construction and operation of the North Baja XPress Project[2] because the project is required by the public convenience and necessity. I write separately to make a handful of points.
First, although I agree that the Commission must act “in accordance with our . . . statutory duties,”[3] it is necessary to take a moment to explain the scope of the public convenience and necessity standard. The Supreme Court has found that NGA section “7(e) requires the Commission to evaluate all factors bearing on the public interest.”[4] This obligation, however, is not unlimited in scope and this requirement cannot be read in a vacuum. The Supreme Court has explained that the inclusion of the term “public interest” in our statute is not “a broad license to promote the general public welfare”—instead, it “take[s] meaning from the purposes of the regulatory legislation.”[5] We must then turn to the purpose of the NGA, which the Supreme Court has instructed us is “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[6] To the extent to which any of the Commission’s recent or future certificate issuances attempt to expand the subjects considered in the Commission’s balancing under the public convenience and necessity standard, as contemplated in the now-draft Updated Certificate Policy Statement,[7] I reiterate my view that any balancing regime the Commission employs must “take meaning” from the purpose of the NGA.
Second, as I have explained in recently-issued certificate orders,[8] while not fatal to the durability of the order, I would have explicitly repudiated Northern Natural Gas Company[9] and reaffirmed the Commission’s prior position that “[w]ithout an accepted methodology, the Commission cannot make a finding whether a particular quantity of greenhouse gas [(GHG)] emissions poses a significant impact on the environment, whether directly or cumulatively with other sources, and how that impact would contribute to climate change.”[10] This is because, as the Commission has stated, it is unable to connect a particular project’s GHG emissions to discrete, physical effects on the environment. [11] The Council on Environmental Quality (CEQ) has found similarly.[12] Moreover, 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 GHG emissions.[13] And the Commission’s recent attempts to do so, absent the expertise to make such a determination and the statutory authority to impose it, have amounted to little more than picking arbitrary numbers.[14]
In now stating in certificate orders that “[t]he Commission is not characterizing these emissions as significant or insignificant here because we are conducting a generic proceeding to determine whether and how the Commission will conduct significance determinations going forward,”[15] the Commission has effectively preserved its ability to expand its use of the flawed “eyeball” test, possibly with a new number picked as the threshold. Perhaps, the number picked will be 165,000 metric tons per year of GHG emissions.[16] Perhaps higher.[17] Or perhaps lower. There is no way of knowing. But we have learned that if a new number is to be picked to serve as a significance threshold for GHG emissions, that number will be based solely on the whim of a majority of commissioners. Regardless, such action is neither within our authority[18] nor can it be considered reasoned decision making.[19]
Third, regarding the inclusion of a calculation of the Social Cost of Carbon from the project’s emissions,[20] the Commission has provided extensive discussion on why the use of the Social Cost of Carbon is not appropriate in project-level NEPA review, and why it cannot meaningfully inform the Commission’s decisions on natural gas infrastructure projects under the NGA.[21] Nothing can be gleaned from the numbers calculated by Commission staff and included in today’s order. Moreover, because the Social Cost of Carbon was not developed for project-level review, its use is not required for the evaluation of impacts under section 1502.21 of the CEQ’s regulations.[22]
Finally, I would like to highlight the unnecessary delay of today’s issuance. It has been more than two years since North Baja filed its application;[23] more than a year and a half since the Commission issued an Environmental Assessment (EA) for the project;[24] and more than a year since North Baja’s requested action date.[25] There was no reason for this delay. Today’s order proves that these delays were wholly needless. For instance, the Commission states that the draft Environmental Impact Statement (EIS) “incorporated the EA’s analysis and conclusions, with the exception of those related to the project’s impacts on climate change, responded to comments received on the EA, and estimated downstream GHG emissions related to the project, thus providing information that might assist the Commission’s consideration of the project’s contribution to climate change.”[26] But how can such information “assist the Commission’s consideration of the project’s contribution to climate change”[27] when the Commission, later in the order, correctly recognizes that under court precedent, the Commission is not permitted to consider downstream GHG emissions associated with the export of the natural gas transported by the project?[28] What was the purpose of preparing an EIS? The Commission could have, and in normal practice does, address comments on the EA in its certificate order.
The EA quantified the relevant emissions[29] and came to the same conclusion as in the draft and final EISs: “we are unable to come to a significance determination regarding the Project’s impacts on climate change.”[30] As far as I know, no court has ever instructed the Commission that an EA was inadequate for the consideration of projects’ GHG emissions. In fact, in the recent Food & Water Watch decision, the U.S. Court of Appeals for the District of Columbia Circuit requires the Commission, on remand, 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.”[31] The court did not remand on the basis that an EIS should have been prepared.
Thus, the only explanation is that Commission action was delayed in order to issue the Updated Certificate Policy Statement and Interim GHG Policy Statement first.[32] The Chairman has all but acknowledged as much.[33] I am pleased, however, that my colleagues appear to have reconsidered their position that the Commission needed to establish a threshold for determining what level of project-induced greenhouse gas emissions is significant as a precondition to action on pending certificate applications.[34] I remain hopeful that my colleagues may yet reconsider their attempt to regulate in an area that we simply cannot.[35]
Of course, one cannot help but notice the Commission inserting elements of the now-draft policy statements. The order notes whether the project shipper is an affiliate of North Baja in the project need discussion.[36] How to consider affiliate precedent agreements is a subject of the draft Updated Certificate Policy Statement.[37] Also in the project need section, the Commission discusses the purported end use of the gas transported by the project.[38] The draft Updated Certificate Policy Statement proposes to deny a pipeline application if an applicant does not provide information on end use.[39]
In addition, the order describes North Baja’s voluntary participation in emission reduction initiatives.[40] Why does the Commission offer such information? It does not say. Could it be that the Commission is balancing the mitigation in its public convenience and necessity test? Or could it simply be that the Commission intended to respond to comments by the U.S. Environmental Protection Agency. In any event, what is notably absent from the order? A discussion on the Commission’s authority to impose GHG mitigation measures.
Why bother with issuing policy statements that attract attention when you can just change the policy in serial adjudications with a limited number of parties and a now certificate holder that has no incentive to appeal?
For these reasons, I respectfully concur in the judgment.
[1] 15 U.S.C. § 717f(c).
[2] See North Baja Pipeline, LLC, 179 FERC ¶ 61,039 (2022) (North Baja).
[3] Id. P 44 n.74 (“While the Commission is not one of the specified agencies in Executive Order 12898, the Commission nonetheless addresses environmental justice in its analysis, in accordance with our governing regulations and guidance, and statutory duties”) (citing 15 U.S.C. § 717f; 18 C.F.R. § 380.12(g) (requiring applicants to submit information about the socioeconomic impact area of a project for the Commission’s consideration during NEPA review); FERC, Guidance Manual for Environmental Report Preparation at 4-76 to 4-80 (Feb. 2017), https://www.ferc.gov/sites/default/files/2020-04/guidance-manual-volume-1.pdf.).
[4] Atl. Ref. Co. v. Pub. Serv. Comm’n of N.Y., 360 U.S. 378, 391 (1959).
[5] NAACP v. Fed. Power Comm’n, 425 U.S. 662, 669 (1976) (NAACP).
[6] Id. at 669-70; accord Myersville Citizens for a Rural Cmty., 783 F.3d 1301, 1307 (D.C. Cir. 2015) (quoting NAACP, 425 U.S. at 669-70). I note that the Supreme Court has also recognized the Commission has authority to consider “other subsidiary purposes,” such as “conservation, environmental, and antitrust questions.” NAACP, 425 U.S. at 670 & n.6 (citations omitted). But all subsidiary purposes are, necessarily, subordinate to the statute’s primary purpose.
[7] Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,107 (2022) (Updated Certificate Policy Statement); see Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,197, at P 2 (2022) (converting the two policy statements issued on February 18, 2022, Updated Certificate Policy Statement, 178 FERC ¶ 61,107 and Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Revs., 178 FERC ¶ 61,108 (2022) (Interim GHG Policy Statement), to “draft” policy statements).
[8] See, e.g., Columbia Gulf Transmission, LLC, 178 FERC ¶ 61,198 (2022) (Danly, Comm’r, concurring in the judgment at PP 2-4) (Columbia Gulf).
[9] North Baja, 179 FERC ¶ 61,039 at P 38 n.52 (citing N. Nat. Gas Co., 174 FERC ¶ 61,189 (2021) (Danly, Comm’r, concurring in part and dissenting in part) (Northern)). In Northern, a majority of my colleagues established what has been referred to (by some) as the “eyeball” test. See Catherine Morehouse, Glick, Danly spar over gas pipeline reviews as FERC considers project’s climate impacts for first time, Util. Dive (Mar. 19, 2021), https://www.utilitydive.com/news/glick-danly-spar-over-gas-pipeline-reviews-as-ferc-considers-projects-cli/597016/ (“‘We essentially used the eyeball test,’ [Chairman Glick] said, adding that based on that analysis, ‘it didn’t seem significant in terms of the impact of those emissions on climate change.’”).
[10] Dominion Transmission, Inc., 163 FERC ¶ 61,128, at P 67 (2018) (citation omitted).
[11] See, e.g., Nat’l Fuel Gas Supply Corp., 158 FERC ¶ 61,145, at P 188 (2017).
[12] See CEQ, Draft [National Environmental Policy Act (NEPA)] Guidance on Consideration of the Effects of Climate Change and Greenhouse Gas Emissions, at 3 (Feb. 18, 2010), https://obamawhitehouse.archives.gov/sites/default/files/microsites/ceq/20100218-nepa-consideration-effects-ghg-draft-guidance.pdf (“it is not currently useful for the NEPA analysis to attempt to link specific climatological changes, or the environmental impacts thereof, to the particular project or emissions, as such direct linkage is difficult to isolate and to understand.”).
[13] See, e.g., Mountain Valley Pipeline, LLC, 163 FERC ¶ 61,197, at P 292 (2018).
[14] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 at PP 79-81 (establishing a significance threshold of 100,000 metric tons per year of CO2e); id. (Danly, Comm’r, dissenting at PP 32-36) (explaining why the majority’s presumptive significance threshold is illogical); see also Northern, 174 FERC ¶ 61,189 (Danly, Comm’r, concurring in part and dissenting in part at P 16) (comparing the Northern test to “like posting a speed limit sign with a question mark instead of a number, leaving it to the police officer to decide arbitrarily whether you were speeding”).
[15] North Baja, 179 FERC ¶ 61,039 at P 38.
[16] See Columbia Gulf, 178 FERC ¶ 61,198 (Glick, Chairman, concurring at P 5) (“I would have preferred to apply Northern Natural here and would have concluded based on evidence in the record that the relevant 165,000 metric tons per year of GHG emissions are not significant.”) (citation omitted); Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 (2022) (Glick, Chairman, concurring at P 5) (“I would have preferred to apply Northern Natural here and would have concluded based on evidence in the record that the relevant 145,000 metric tons per year of GHG emissions are not significant.”) (citation omitted) (Tennessee Gas).
[17] See Columbia Gulf, 178 FERC ¶ 61,198 (Glick, Chairman, concurring at P 5 n.14) (“I recognize the now-draft GHG policy statement proposes 100,000 metric tons as a threshold over which a project’s GHG emissions would be presumed significant. . . . In my view, that is a deliberately conservative number intended to ensure that the Commission did not lead projects developers down the path of an environmental assessment, only to subsequently change course and require an environmental impact statement in the event that the Commission were to establish a lower threshold in a final GHG policy statement than it did in the then-interim, now-draft policy statement. I remain open to reviewing the comments submitted in response to that draft statement, as well as guidance we may receive from other federal agencies, in considering what threshold would be appropriate in a final policy statement.”) (emphasis added) (citation omitted); Tennessee Gas, 178 FERC ¶ 61,199 (Glick, Chairman, concurring at P 5 n.13) (same).
[18] See Atl. City Elec. Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2002) (“As a federal agency, FERC is a ‘creature of statute,’ having ‘no constitutional or common law existence or authority, but only those authorities conferred upon it by Congress.’”) (quoting Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001)); see Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988) (“It is axiomatic that an administrative agency’s power to promulgate legislative regulations is limited to the authority delegated by Congress.”); see also Senate Energy & Nat. Res. Committee, Full Committee Hearing To Review FERC’s Recent Guidance On Natural Gas Pipelines, https://www.energy.senate.gov/hearings/2022/3/full-committee-hearing-to-review-ferc-s-recent-guidance-on-natural-gas-pipelines, at 00:58:30 (Mar. 3, 2022) (questioning by Chairman Manchin regarding the recent policy statements: “The Commission, you all acknowledge, that . . . no federal agency, including this Commission has established a threshold for determining what level of project-induced greenhouse gas emissions is significant. Why do you all think that FERC, whose primary purpose is to regulate efficient and reliable energy, should be the first agency, the first to set such a standard rather than the environmental agencies?”) (March 2022 Senate Hearing); see generally Interim GHG Policy Statement, 178 FERC ¶ 61,108 (Danly, Comm’r, dissenting).
[19] The Commission is authorized to make a “‘rational legislative-type judgment’” but may not “pluck a number out of thin air when it promulgates rules.” WJG Tel. Co., Inc. v. FCC, 675 F.2d 386, 388-89 (D.C. Cir. 1982) (quoting FCC v. Nat’l Citizens Comm. for Broad., 436 U.S. 775, 814 (1978)); see also LeMoyne-Owen Coll. v. NLRB, 357 F.3d 55, 61 (D.C. Cir. 2004) (“In the absence of an explanation, the ‘totality of the circumstances’ can become simply a cloak for agency whim—or worse.”) (citation omitted).
[20] See North Baja, 179 FERC ¶ 61,039 at P 43.
[21] See, e.g., Mountain Valley Pipeline, LLC, 161 FERC ¶ 61,043, at P 296 (2017), order on reh’g, 163 FERC ¶ 61,197, at PP 275-97 (2018), aff’d sub nom. Appalachian Voices v. FERC, No. 17-1271, 2019 WL 847199, at *2 (D.C. Cir. 2019) (“[The Commission] gave several reasons why it believed petitioners’ preferred metric, the Social Cost of Carbon tool, is not an appropriate measure of project-level climate change impacts and their significance under NEPA or the Natural Gas Act. That is all that is required for NEPA purposes.”).
[22] 40 C.F.R. § 1502.21(c). This reasoning is consistent with Florida Southeast Connection, LLC where the Commission stated, “[a]nd we do not dispute that [the Social Cost of Carbon] is generally accepted in the scientific community and can play an important role in different contexts, such as rulemaking proceedings.” 164 FERC ¶ 61,099, at P 35 (2018) (emphasis added) (citation omitted).
[23] See North Baja Pipeline, LLC, Abbreviated Application for Certificate of Public Convenience and Necessity, Docket No. CP20-27-000 (Dec. 16, 2019) (Application).
[24] See Commission Staff, Environmental Assessment for North Baja Pipeline, LLC’s North Baja XPress Project, Docket No. CP20-27-000 (Sept. 8, 2020) (North Baja XPress Project EA).
[25] See Application at 1 (listing December 31, 2020 as the requested action by date).
[26] North Baja, 179 FERC ¶ 61,039 at P 32 (emphasis added).
[27] Id.
[28] See id. P 37 (explaining that “the Commission need not consider the effects of upstream production or downstream transportation, consumption, or combustion of exported gas”) (citing Sierra Club v. FERC, 827 F.3d 36, 48 (D.C. Cir. 2016)); id. (“the Commission will not consider the upstream or downstream GHG emissions associated with the export of the natural gas transported by the project”); id. P 37 n.51 (“The EIS included, for informational purposes, a full-burn estimate of the annual downstream GHG emissions related to the incremental capacity created by the project, 495,000 Dth/d, which equals 9.56 million metric tpy of CO2e.”) (emphasis added) (citing Final Environmental Impact Statement for North Baja Pipeline, LLC’s North Baja XPress Project, Docket No. CP20-27-000, at 14 (Oct. 22, 2021) (Final EIS)).
[29] North Baja XPress Project EA at 50, 52.
[30] Final EIS at 16; Draft Environmental Impact Statement for North Baja Pipeline, LLC’s North Baja XPress Project, Docket No. CP20-27-000, at 14 (July 9, 2021); see also North Baja XPress Project EA at 68 (“Absent such a method for relating GHG emissions to specific resource impacts, we are not able to assess potential GHG-related impacts attributable to this project. Without the ability to determine discrete resource impacts, we are unable to determine the significance of the project’s contribution to climate change.”).
[31] See Food & Water Watch v. FERC, 28 F.4th 277, 289 (D.C. Cir. 2022) (emphasis added).
[32] See Commissioner Danly March 2, 2022 Letter in Response to Senator Barrasso’s Letter Dated February 15, 2022, Docket Nos. PL18-1-000, et al., at 5-7, https://www.ferc.gov/news-events/news/commissioner-james-danly-letter-senator-barrasso.
[33] See March 2022 Senate Hearing at 00:59:02 (recording the following explanation by Chairman Glick regarding why he thinks the Commission needed to establish a significance threshold: “We need to act on this issue . . . . [W]e have cases that the courts have told us that we have to analyze the impact of the greenhouse gas emissions as to whether they’re significant or not, and if we sat there and didn’t do anything, these cases would be pending, sitting there and sitting there.”).
[34] Compare id. (explaining that “if we sat there and didn’t [establish a significance threshold], these cases would be pending, sitting there and sitting there”), with Columbia Gulf, 178 FERC ¶ 61,198 (Glick, Chairman, concurring at P 4) (“I concur because today’s order does not rehash those same arguments on the difficulty of assessing climate impacts. Instead, it explains that the Commission is not making a determination on significance given the proposal in our now-draft policy statement to establish a rebuttable presumption that a project causing 100,000 metric tons of CO2e emissions would significantly contribute to climate change. Under the circumstances, I can support that conclusion.”) (emphasis added); see also Tennessee Gas, 178 FERC ¶ 61,199 (Glick, Chairman, concurring at P 4) (supporting the conclusion that “the Commission is not making a determination on significance given the proposal in our now-draft policy statement to establish a rebuttable presumption that a project causing 100,000 metric tons of CO2e emissions would significantly contribute to climate change.”).
[35] See Richmond Power & Light v. FERC, 574 F.2d 610, 620 (D.C. Cir. 1978) (“What the Commission is prohibited from doing directly it may not achieve by indirection.”) (citation omitted).
[36] See North Baja, 179 FERC ¶ 61,039 at P 13.
[37] See Updated Certificate Policy Statement, 178 FERC ¶ 61,107 at P 60.
[38] See North Baja, 179 FERC ¶ 61,039 at P 13.
[39] See Updated Certificate Policy Statement, 178 FERC ¶ 61,107 at P 55 (“To the extent applicants do not have information on the end use of the gas, they are encouraged to work with their prospective shippers to obtain it. The absence of this information may prevent an applicant from meeting its burden to demonstrate that a project is needed.”).
[40] See North Baja, 179 FERC ¶ 61,039 at P 40.