Commissioner James Danly Statement
May 19, 2022
Docket No. CP21-78-000
I concur in the issuance of a Natural Gas Act (NGA) section 7(c)[1] certificate of public convenience and necessity to ANR Pipeline Company (ANR), authorizing the construction and operation of the Wisconsin Access Project[2] because the project is required by the public convenience and necessity. I write separately to make a handful of points.
First, 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.”[3] The Commission asserts that “GHG emissions from the downstream combustion of transported gas is a reasonably foreseeable effect of the project where the project shippers were local distribution companies that intended to use the gas to serve demand within their service territories.”[4] The Commission is wrong. The facts here, like in Food & Water Watch v. FERC,[5] involve adding capacity to provide incremental transportation service to shippers that include local distribution companies. And I recognize that the court “concluded that the end use of the transported gas is reasonably foreseeable.”[6] 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 “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.”[7] I am not convinced that the local distribution companies involved here and the discrete, known generators at issue in Sierra Club v. FERC (Sabal Trail)[8] 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, which Food & Water Watch applies, is inconsistent with the Supreme Court’s holding in Department of Transportation v. Public Citizen (Public Citizen).[9] My views are not idiosyncratic. Both the partial dissenting statement in Sabal Trail and the Court of Appeals for the Eleventh Circuit agree.[10]
Second, as I have explained in recently-issued certificate orders,[11] while not fatal to the durability of the order, I would have explicitly repudiated Northern Natural Gas Company[12] 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.”[13] 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.[14] The Council on Environmental Quality (CEQ) has found similarly.[15] 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.[16] And the Commission’s recent attempts to do so, absent the expertise to make such a determination, have amounted to little more than picking arbitrary numbers.[17]
By now stating in our certificate orders that “[t]he Commission is not herein characterizing these emissions as significant or insignificant because we are conducting a generic proceeding to determine whether and how the Commission will conduct significance determinations going forward,”[18] 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.[19] Perhaps higher.[20] 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[21] nor can it be considered reasoned decision making.[22]
Third, regarding the inclusion of a calculation of the Social Cost of Carbon from the project’s emissions, [23] 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. [24] 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.[25]
I should also highlight the Commission’s recognition that “[i]n support of the Commission using the social costs of GHGs, [the Environmental Protection Agency] urges the Commission to consider the D.C. Circuit’s recent decision in [Vecinos para el Bienestar de la Comunidad Costera v. FERC (Vecinos)].”[26] But that case does not bear the weight that the EPA appears to believe it does. In Vecinos, the U.S. Court of Appeals for the District of Columbia Circuit’s admonished the Commission, not for failing to use the Social Cost of Carbon, but for failing to respond to an argument. The Court stated that “[t]o the extent that the Commission failed to respond to Petitioners’ argument that 40 C.F.R. § 1502.21(c) required it to use the social cost of carbon protocol or some other generally accepted methodology to assess of the impact of the projects’ greenhouse gas emissions, we agree with Petitioners that the Commission failed to adequately analyze the impact of the projects’ greenhouse gas emissions.”[27] This is a narrow holding and the court’s decision cannot be read as anything more than a reaffirmation of our longstanding (and unquestioned) obligation to respond to arguments. The fact that this particular argument focused on the Social Cost of Carbon is merely incidental.
I also observe that in the project need section, the Commission states that ANR entered into binding precedent agreements with local distribution companies, a municipally owned natural gas utility, and a manufacturer.[28] I point this out merely because the discussion of end use in the project need section has been included in several recent certificate orders. This inclusion perhaps gestures in the direction of the now-draft Updated Certificate Policy Statement[29] in which the Commission wishes to afford itself the discretion to deny a section 7 application if applicants fail to provide end use information.[30]
And in response to the EPA’s recommendation that the Commission should consider applicable measures from the EPA’s Construction Emission Control Checklist to reduce air emissions, specifically, GHG emissions, resulting from project construction and that ANR should implement additional methane mitigation activities during project operation, the Commission discusses “mitigation measures” taken by ANR to minimize construction emissions and ANR’s participation in EPA’s Methane Challenge Program and the Natural Gas STAR program.[31] Why does the Commission offer such information? Could it be attempting to weigh mitigation measures in its public convenience and necessity test?
Finally, the natural gas industry has seen tremendous uncertainty due to several recent Commission actions: its establishment of the “eyeball test,”[32] its reopening of a final non-appealable certificate order,[33] the preparation of Environmental Impact Statements where Environmental Assessments had long sufficed, and the establishment of a significance threshold in the Interim GHG Policy Statement,[34] which has since wisely been converted to a draft policy statement. I fear that there is yet more uncertainty to come with CEQ’s new NEPA regulations taking effect tomorrow, May 20, 2022.[35] Although it is not yet clear how the Commission will apply the new regulations to currently pending projects where environmental documents have already been prepared, should the Commission decide to prepare supplemental environmental documents, or receive guidance from CEQ to do so, project sponsors will likely experience even more delay.
For these reasons, I respectfully concur in the judgment.
[1] 15 U.S.C. § 717f(c).
[2] See ANR Pipeline Co., 179 FERC ¶ 61,122 (2022) (ANR).
[3] Id. P 34.
[4] Id.
[5] 28 F.4th 277 (D.C. Cir. 2022) (Food & Water Watch).
[6] Id. at 289.
[7] Id. (emphasis added).
[8] 867 F.3d 1357 (D.C. Cir. 2017).
[9] 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).
[10] 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.”).
[11] 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).
[12] N. Nat. Gas Co., 174 FERC ¶ 61,189 (2021) (Northern Natural). In Northern Natural, 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.’”).
[13] Dominion Transmission, Inc., 163 FERC ¶ 61,128, at P 67 (2018) (footnote omitted).
[14] See, e.g., Nat’l Fuel Gas Supply Corp., 158 FERC ¶ 61,145, at P 188 (2017).
[15] 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.”).
[16] See, e.g., Mountain Valley Pipeline, LLC, 163 FERC ¶ 61,197, at P 292 (2018).
[17] See Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Reviews, 178 FERC ¶ 61,108, at PP 79-81 (2022) (establishing a significance threshold of 100,000 metric tons per year of CO2e) (Interim GHG Policy Statement); id. (Danly, Comm’r, dissenting at PP 32-36) (explaining why the majority’s presumptive significance threshold is illogical); see also Northern Natural, 174 FERC ¶ 61,189 (Danly, Comm’r, concurring in part and dissenting in part at P 16) (comparing the Northern Natural test to “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”).
[18] ANR, 179 FERC ¶ 61,122 at P 35 (footnote omitted).
[19] 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.”) (footnote 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.”) (footnote omitted) (Tennessee Gas).
[20] 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.”) (citation omitted) (emphasis added); Tennessee Gas, 178 FERC ¶ 61,199 (Glick, Chairman, concurring at P 5 n.13) (same).
[21] 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)) (emphasis in Atl. City Elec. Co.); 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?”); see generally Interim GHG Policy Statement, 178 FERC ¶ 61,108 (Danly, Comm’r, dissenting).
[22] 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).
[23] See ANR, 179 FERC ¶ 61,122 at P 44.
[24] 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.”).
[25] 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) (footnote omitted) (emphasis added).
[26] ANR, 179 FERC ¶ 61,122 at P 42.
[27] Vecinos, 6 F.4th 1321, 1329 (D.C. Cir. 2021).
[28] ANR, 179 FERC ¶ 61,122 at P 14.
[29] See 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 Updated Certificate Policy Statement and Interim GHG Policy Statement to draft” policy statements).
[30] 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.”).
[31] See ANR, 179 FERC ¶ 61,122 at PP 41.
[32] See infra n.12.
[33] See Algonquin Gas Transmission, LLC, 174 FERC ¶ 61,126 (2021) (Danly, Comm’r, dissenting).
[34] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 at PP 79-81.
[35] See National Environmental Policy Act Implementing Regulations Revisions, 87 Fed. Reg. 23,543 (Apr. 20, 2022) (to be codified at 40 C.F.R. pts. 1502, 1507, and 1508).