Commissioner James Danly Statement
December 16, 2022
Docket No. CP22-40-000
I concur in the decision to grant Eastern Shore Natural Gas Company’s (Eastern Shore) requested Natural Gas Act (NGA) section 7 authorization.[1] There are any number of problems with this order, as there are with many of the Commission’s recent NGA sections 3 and 7[2] authorizations.
First, the Commission should not lose sight of the scope of our authority under the NGA.[3] While the Supreme Court has found that NGA section “7(e) requires the Commission to evaluate all factors bearing on the public interest,”[4] the Supreme Court has also 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] And the purpose of the NGA is “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[6] It follows, therefore, that any regime we institute for the Commission’s balancing under the public convenience and necessity standard must “take meaning” from the purpose of the NGA.
Second, we should have repudiated Northern.[7] The Commission states in this order that “because we are conducting a generic proceeding to determine whether and how the Commission will conduct significance determinations for GHG emissions going forward, the Commission is not herein characterizing these emissions as significant or insignificant.”[8] Though seemingly forgotten by this Commission, it is still true 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.”[9] The Commission is unable to connect a particular project’s GHG emissions to discrete, physical effects on the environment.[10] And 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.[11] 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.[12] Such reliance on arbitrary, unsupported thresholds, will subject our issuances to significant—and wholly unnecessary—legal risk.[13] For that reason, it is worth repeating: we should never have articulated the 100,000 metric tons per year significance threshold in the now-draft Interim GHG Policy Statement.[14]
Moreover, in today’s order the Commission adopts staff’s “supplemental climate impact analysis” in Appendix A. Sugarcoating the Commission’s “analysis” just because we are unable to determine the significance of GHG emissions does not help the matter. Today’s order states that “based on our adoption of staff’s supplemental climate impact analysis in Appendix A of this order, we recognize that the project’s contributions to GHG emissions globally contributes incrementally to future climate change impacts, and have identified climate change impacts in the region.”[15] Exactly what “climate change impacts in the region” did the Commission “identif[y]”?[16] There certainly appear to be no “identified climate change impacts” in the record. Could it be that the Commission is referring to no more than the disclosure of estimated construction emissions, direct operational emissions, and the estimates of emissions from the downstream combustion of the gas transported by the project or the comparison of the project’s estimated GHG emissions to the total GHG emissions of the United States as a whole and at the state level?[17] Is the Commission referring to its discussion of the U.S. Global Change Research Program’s Fourth Assessment Report, which was published in 2017, and that report’s “observations” and “projections” of “environmental impacts [that] are attributed to climate change” for the Northeast region of the United States?[18] Can the Commission’s mere disclosure of the project’s direct emissions estimates and downstream emissions estimates and their bald comparison to the total GHG emissions of the United States as a whole and at the state level truly be considered “analysis” when nothing can be gleaned from that information?[19] This is especially doubtful given that the Commission has no means by which to determine the significance of those estimated emissions.
Without a credible, reasoned method to determine significance, the Commission has a difficult road ahead should it continue in its pursuit of environmental policy goals. Aside from the legal risk under the Administrative Procedure Act (APA) that would attend the establishment of any unsupported, arbitrary threshold, a reading of the Supreme Court’s decision in West Virginia v. Environmental Protection Agency[20] should impress upon the Commission that caution is necessary when contemplating the regulation of subjects that have not been clearly placed within our jurisdiction by Congress. “Agencies have only those powers given to them by Congress, and ‘enabling legislation’ is generally not an ‘open book to which the agency [may] add pages and change the plot line.’”[21] Notably, the Commission received a much-needed reminder of this several months ago when the U.S. Court of Appeals for the Fifth Circuit vacated a portion of the Commission’s order that was ultra vires because the Commission acted outside its statutory authority.[22] Because the Commission does not have “a clear delegation from [Congress]”[23] to regulate GHG emissions, the Commission’s charge under the NGA remains “encourag[ing] the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[24] In other words, the NGA’s purpose, established by Congress and articulated by the Supreme Court, is for the Commission to promote the development of natural gas infrastructure.
Additionally, today’s order should not have included Social Cost of GHGs calculations.[25] In recent orders, the Commission has recognized that the Social Cost of Carbon is not useful in project-level analysis.[26] Since no valuable information can be extracted from the numbers, they serve merely to confuse the matter.[27] For example, we have seen the Commission recently state in a certificate order that it did not “rely on . . . the results of the social cost of carbon methodology,”[28] only to then state on rehearing that it “evaluated the East 300 Upgrade Project’s GHG emissions using the Social Cost of Carbon tool by calculating and disclosing the total cost of carbon for the projects’ annual GHG emissions over the life of the 20-year contract for firm transportation service.”[29] More than once, now, the Commission has reached back in time to offer ahistorical recharacterizations of its own actions on rehearing.[30] And, in this order, the Commission takes a further step to erode language that explains what the Commission is doing with the Social Cost of GHGs calculations. The answer is quite simple: it is doing nothing with them. So why does today’s order not acknowledge that “we are not relying on or using the social cost of GHGs estimates to make any finding or determination regarding either the impact of the proposed project’s GHG emissions or whether the project is in the public convenience and necessity,”[31] when we have done so in other orders where the Commission has disclosed the social cost of GHGs estimates in its order? I acknowledge that the Commission says that “we are not applying the social cost of GHGs because we have not determined which, if any, modifications are needed to use this tool for project-level analyses.”[32] It is true that we “are not applying the social cost of GHGs” but it is not because we “have not determined which . . . modifications” are needed, as if to imply that one day such modifications could make the social cost of GHGs useful to project-level decision making. I cannot understand why the Commission does not go on to state that the social cost of GHGs estimates are not used “to make any finding or determination regarding either the impact of the proposed project’s GHG emissions or whether the project is in the public convenience and necessity.”[33] This is especially the case given that, in another order issued at today’s open meeting we acknowledge that the Commission previously made this very statement.[34] Why not here?
What it comes down to is this—until a credible methodology, based on reasoned decision making, is established by a competent agency with the requisite statutory authority, the Commission cannot conclude whether the estimated GHG emissions from a proposed project are significant. The answer to the Commission’s problem is not to paper over the lack of analytical material in its orders by simply declaring that it has conducted “analysis” that has led to the identification of unspecified “impacts.” Ignore how the Commission characterizes what it is doing; look instead to what it actually does. Equally important is what it fails to do. The Commission has never established a reasoned, credible basis upon which to ascribe significance under NEPA to a given quantity of project-level GHG emissions, using the Social Cost of Carbon or any other metric. Why? Because there exist no means by which to arrive at such a determination that would satisfy our obligations under the APA to engage in reasoned decision making.
For these reasons, I respectfully concur in the result.
[1] 15 U.S.C. § 717f.
[2] Id. § 717b; id. § 717f.
[3] See, e.g., Tex. Gas Transmission, LLC, 181 FERC ¶ 61,049 (2022) (Danly, Comm’r, concurring in the judgment at P 2).
[4] Atl. Ref. Co. v. Pub. Serv. Comm’n of N.Y., 360 U.S. 378, 391 (1959).
[5] NAACP v. FPC, 425 U.S. 662, 669 (1976) (NAACP).
[6] Id. at 669-70; accord Myersville Citizens for a Rural Cmty., Inc. v. FERC, 783 F.3d 1301, 1307 (D.C. Cir. 2015) (Myersville) (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] N. Nat. Gas Co., 174 FERC ¶ 61,189 (2021) (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.’”). I pause to note that the Commission doesn’t even make a passing reference to its Northern precedent in today’s order.
[8] E. Shore Nat. Gas Co., 181 FERC ¶ 61,233, at P 26 (2022).
[9] Dominion Transmission, Inc., 163 FERC ¶ 61,128, at P 67 (2018) (footnote omitted) (emphasis added).
[10] See, e.g., Nat’l Fuel Gas Supply Corp., 158 FERC ¶ 61,145, at P 188 (2017).
[11] See, e.g., Mountain Valley Pipeline, LLC, 163 FERC ¶ 61,197, at P 292 (2018).
[12] See Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Revs., 178 FERC ¶ 61,108, at PP 79-81 (2022) (establishing a significance threshold of 100,000 metric tons per year (tpy) 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, 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”).
[13] 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).
[14] But see Columbia Gulf Transmission, LLC, 178 FERC ¶ 61,198 (2022) (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).
[15] E. Shore Nat. Gas Co., 181 FERC ¶ 61,233 at P 25 (2022) (emphasis added).
[16] Id.
[17] See id. PP 22, 25; id. App. A, 28-31. For the same reasons as I stated in my statement in Spire STL Pipeline LLC, 181 FERC ¶ 61,232 (2022) (Danly, Comm’r, concurring in the result at P 7), I disagree with the Commission’s assertion in this order that the “emissions from the downstream combustion of the gas transported by the project are reasonably foreseeable.” E. Shore Nat. Gas Co., 181 FERC ¶ 61,233 at P 21.
[18] See id., App. A, 28-30 (citing U.S. Global Change Research Program, Climate Science Special Report: Fourth National Climate Assessment, Volume I, Chapter 3 Detection and Attribution of Climate Change (2017), available at: https://science2017.globalchange.gov/chapter/3/ ).
[19] See Merriam-Webster, https://www.merriam-webster.com/dictionary/analysis (defining “analysis” as “a detailed examination of anything complex in order to understand its nature or to determine its essential features : a thorough study”); Cambridge Dictionary, https://dictionary.cambridge.org/dictionary/english/analysis (defining “analysis” as “the act of studying or examining something in detail, in order to discover or understand more about it, or your opinion and judgment after doing this”); Oxford Learner’s Dictionaries, https://www.oxfordlearnersdictionaries.com/definition/english/analysis (defining “analysis” as “the detailed study or examination of something in order to understand more about it; the result of the study”).
[20] West Virginia v. EPA, 142 S. Ct. 2587 (2022).
[21] Id. at 2609 (citation omitted).
[22] See Midship Pipeline Co., L.L.C. v. FERC, 45 F.4th 867, 877 (5th Cir. 2022) (vacating part of the Commission’s order and remanding the remainder because “[t]he FERC’s interpretation of the NGA to give the agency power to determine ‘the reasonable cost’ of remediation efforts ‘change[d] the plot line’ of its enabling legislation, and was therefore erroneous” and “[t]he FERC lacks such authority under the NGA, and it likewise lacked authority to order an ALJ to make such a determination indirectly”) (quoting West Virginia v. EPA, 142 S. Ct. at 2609).
[23] West Virginia v. EPA, 142 S. Ct. at 2616.
[24] NAACP, 425 U.S. at 669-70 (citation omitted); accord Myersville, 783 F.3d at 1307 (quoting NAACP, 425 U.S. at 669-70).
[25] See E. Shore Nat. Gas Co., 181 FERC ¶ 61,233 at App. A, 30-31.
[26] See Tenn. Gas Pipeline Co., L.L.C., 181 FERC ¶ 61,051, at P 37 (2022) (“[T]here are no established criteria for identifying the monetized values from the Social Cost of Carbon tool that are to be considered significant for [National Environmental Policy Act (NEPA)] reviews and we are currently unable to identify any such appropriate criteria.”) (citations omitted); id. P 36 (“We also noted that the Commission ‘has not determined which, if any, modifications are needed to render that tool useful for project-level analyses.’”) (citation omitted); Columbia Gulf Transmission, LLC, 180 FERC ¶ 61,206, at P 91 (2022) (“we note that there are currently no criteria to identify what monetized values are significant for NEPA purposes, and we are currently unable to identify any such appropriate criteria”); id. P 89 (recognizing that the Commission noted in the underlying certificate order that it “‘has not determined which, if any, modifications are needed to render [the Social Cost of Carbon] tool useful for project-level analyses’”) (citation omitted); Tenn. Gas Pipeline Co., L.L.C., 180 FERC ¶ 61,205, at P 75 (2022) (“We note that there are currently no criteria to identify what monetized values are significant for NEPA purposes, and we are currently unable to identify any such appropriate criteria.”); id. P 73 (recognizing that the Commission noted in the underlying certificate order that it “‘has not determined which, if any, modifications are needed to render [the Social Cost of Carbon] tool useful for project-level analyses’”) (citation omitted).
[27] 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 Council on Environmental Quality’s regulations. 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).
[28] Tenn. Gas Pipeline Co., L.L.C., 181 FERC ¶ 61,051 at P 36 (citing underlying certificate order in Tenn. Gas Pipeline Co., L.L.C., 179 FERC ¶ 61,041, at P 60 (2022)).
[29] Id. P 37 (emphasis added) (citation omitted).
[30] Compare Tenn. Gas Pipeline Co., L.L.C., 180 FERC ¶ 61,205 at P 75 (stating in the order addressing arguments on rehearing that “[c]onsistent with section 1502.21(c), the Commission evaluated the projects’ GHG emissions based upon the Social Cost of Carbon tool by calculating and disclosing the total cost of carbon for the projects’ annual GHG emissions over the life of the 20-year contracts for firm transportation service”) (emphasis added) (citing Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199, at P 93 (2022)), with Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 at P 92 (“we are not relying on or using the social cost of carbon estimates to make any finding or determination regarding either the impact of the project’s GHG emissions or whether the project is in the public convenience and necessity.”).
[31] See, e.g., Gas Transmission Nw. LLC, 180 FERC ¶ 61,056, at P 62 (2022).
[32] E. Shore Nat. Gas Co., 181 FERC ¶ 61,233 at App. A, 30.
[33] See, e.g., Gas Transmission Nw. LLC, 180 FERC ¶ 61,056 at P 62.
[34] See Gas Transmission Nw. LLC, 181 FERC ¶ 61,234, at P 32 (2022) (“As stated in the Certificate Order, the Commission did not rely on or use the Social Cost of GHGs estimates to make any finding or determination regarding either the impact of the proposed project’s GHG emissions or whether the project is in the public convenience and necessity.”) (citation omitted).