Commissioner James Danly Statement
February 18, 2022
Docket No. PL21-3-000 | Errata
I dissent in full from today’s Interim Greenhouse Gas (GHG) Policy Statement which purports to set forth the Commission’s procedures to evaluate the climate change impacts of proposed natural gas projects under the National Environmental Policy Act (NEPA) and to incorporate climate change considerations into the Commission’s determinations under sections 3 and 7 of the Natural Gas Act (NGA).[1]
This policy statement is irredeemably flawed. It is practically unworkable because it establishes a standardless standard. Its universal application to all projects, both new and pending (some for over two years), is an affront to basic fairness and is unjustifiable, especially in light of the many unnecessary delays already suffered by applicants. It is unlawful because it is illogical, it arrogates to the Commission power it does not have, and it violates the NGA, NEPA and the Commission’s and the Council on Environmental Quality’s (CEQ) regulations. It is also deliberately drafted so as to evade judicial review. Lastly, it will sow confusion throughout an industry that already suffers profound uncertainty. This issuance does not know what it is and neither will affected entities: it is immediately applicable, but also seeks comments, and it is allegedly not a draft policy statement, but an “interim” one. How can stakeholders have any confidence in its contents at all?[2]
When reading this policy statement, it is nearly impossible to credit the majority with actually believing that “minimiz[ing] our litigation risk,” making Commission decisions “legally durable,” and “increas[ing], not reduc[ing], customer and investor confidence,” are truly the goals of this proceeding.[3] Rather, the purpose of this Interim Policy Statement, like several of the Commission’s other recent Natural Gas Act issuances, appears to be to actively discourage the submission of section 3 or section 7 applications by intentionally making the process more expensive, more time-consuming, and riskier.[4]
Overview of the Interim Policy Statement’s Contents
The Interim Policy Statement begins by explaining it will apply upon issuance while at the same time being subject to comment and revision.[5] The majority explains this is necessary to “act on pending applications under sections 3 and 7 of the NGA without undue delay and with an eye toward greater certainty and predictability for all stakeholders.”[6]
Next, it provides a historical background on past court, Commission, and CEQ issuances. For the sake of brevity, I will not describe this background discussion other than to note it is frequently misleading.[7]
Then the Interim Policy Statement announces that “the Commission will quantify a project’s GHG emissions that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action.”[8] This, it seems, will be fairly broad: the majority goes on to say that “[t]his will include GHG emissions resulting from construction and operation of the project as well as, in most cases, GHG emissions resulting from the downstream combustion of transported natural gas.”[9]
The majority also states that it will continue to consider whether upstream emissions are a reasonably foreseeable effect for NGA section 7 projects on a case-by-case basis.[10] Notably missing, though, is any discussion of how upstream emissions could have a reasonably close causal relationship to an NGA section 7 project.[11]
The Interim Policy Statement then describes how the quantity of project’s emissions will be determined: by using a projected utilization rate for the project and considering “other factors that might impact a project’s net emissions.” [12] This raises more questions than it answers. Do these other factors include consideration of whether the natural gas being transported will actually reduce overall emissions or simply replace existing emissions; for example by powering natural gas generation that permits the retirement of higher-emitting generation or by serving an end use need that will turn to a different—and perhaps higher emitting—energy source if the pipeline is not constructed?[13] What does this mean for projects where the end use is unknown? Does the Commission have the expertise to evaluate a project sponsor’s evidence and resolve any factual disputes? Will the majority send these issues to an Administrative Law Judge as it recently did to resolve a dispute over what constituted appropriate post-construction right-of-way restoration (a subject matter with which the Commission presumably has some expertise)?[14]
I would suspect most attentive readers would have been interested to then learn how, having determined the means by which to arrive at these numbers, the Commission plans to weigh emissions among all of the other factors to be considered in its NGA determination. But the majority does not say.
Next, the Interim Policy Statement explains “the Commission is establishing a significance threshold of 100,000 metric tons or more per year [(tpy)] of CO2e”[15] and will presume that the impact of a proposed project exceeding that threshold is significant unless refuted by record evidence.[16] According to Commission staff, of the 214 projects with direct[17] and downstream emissions authorized from January 2017 through June 2021, this policy would have applied to 72% of them. This means that, as of the issuance of this Interim Policy Statement, the EIS is now our default environmental document.[18]
The Interim Policy Statement says the Commission has authority to impose GHG mitigation for both direct emissions and downstream emissions.[19] This is a sweeping claim of jurisdiction and one that drastically departs from the Commission’s historic employment of its conditioning authority. But right on the heels of that jurisdictional declaration, instead of ordering mitigation, the majority “encourages” project sponsors to “propose measures to mitigate the direct GHG emissions of its proposed project to the extent these emissions have a significant adverse environmental impact” and “to mitigate the reasonably foreseeable upstream or downstream emissions associated with their projects.”[20] The majority states the Commission will consider these mitigation measures in its public interest determinations.[21] This whole maneuver is odd—how often does one declare hitherto unasserted jurisdiction and then not employ it? Be warned: this is not restraint, it is foreshadowing.[22]
The majority tells project sponsors they are “free to propose any mechanism to mitigate the project’s GHG emissions”[23] and offers some suggestions. Plant trees.[24] Incorporate renewable energy or other energy efficiency technologies.[25] And, with the faint echo of Johann Tetzel, the majority also suggests purchasing[26] renewable energy offsets.[27]
The majority’s guidance ends there, leaving the project sponsor to figure out how much they should mitigate by these measures,[28] some of which, it ought be pointed out, do not appear to have a discernable connection to the reduction of carbon emissions.[29] Nor does the majority explain how the Commission can verify and track any such mitigation throughout the life of the project.[30] The majority offers no general framework but says only that it wants project sponsors to mitigate “to the greatest extent possible.”[31] One wonders why no mechanism is set forth. Could it be that we learned nothing of value from soliciting comments on GHG mitigation,[32] holding a technical conference on the subject,[33] and soliciting a second round of comments following that technical conference?[34] And think of where this leaves project sponsors. Often, they seek guidance from Commission staff. But for the 30 applications that are currently pending, such communication is potentially barred by the Commission’s ex parte rules.[35] And even for those who are not so disadvantaged, absent direction from the Commission, staff can offer no more than this: you must roll the dice and cross your fingers that the Commission will act on, and maybe even grant, the requested authorization.[36]
But the mitigation requirements may not end there. The majority states it “may require additional mitigation as a condition of an NGA section 3 authorization or section 7 certificate.”[37] Using what standard? Not stated. Perhaps, it will become a good-behavior approach akin to how the Commission has considered landowner impacts, stating: “We are satisfied that [project sponsor] has taken appropriate steps to minimize [GHG emissions].”[38] And this encumbrance is perpetual: mitigation, the majority says, will span “the life of the project.”[39] That is long time. Ample opportunity for invasive oversight, enforcement actions, and novel, as yet unpredictable, employments of the Commission’s authority.[40]
Next, we reach the majority’s guidance on cost recovery. The majority states “[p]ipelines may seek to recover mitigation costs through their rates,” and are “encouraged to submit detailed cost estimates of GHG mitigation in their application and to clearly state how they propose to recover those costs.”[41] Pipelines may recover costs? On what possible basis could the Commission deny recovery? The majority declines to say. Then, presumably in response to comments about increasing rates for low-income communities and requests to balance the cost of mitigation with its environmental benefit, the majority states that “the Commission’s process for section 7 and section 4 rate cases is designed to protect shippers from unjust or unreasonable rates and will continue to do so with respect to the recovery of costs for mitigation measures.”[42] How can that be true when the Commission will issue a certificate only when it determines that proposed mitigation measures are required for a pipeline project to be deemed in the public convenience and necessity? Is the Commission really suggesting that it will deny the recovery of costs that it determines are necessary to satisfy the public interest?
The Interim Policy Statement concludes by informing project sponsors with pending applications that they “will be given the opportunity to supplement the record and explain how their proposals are consistent with this policy statement” and that those filings will be subject to a reply comment period.[43] Future applicants are also “encouraged” to include a list of information in their filings.[44] What happens if a project sponsor supplements its record and the Commission revises the Interim Policy Statement once again before acting on that project sponsor’s application? I can imagine that occurring as the comment deadline is six weeks away. And how can future applicants reasonably rely on interim guidance that may or may not change? What “certainty and predictability”[45] does this policy provide?
In sum, the Commission will weigh direct GHG emissions and, in most cases, downstream emissions in its NGA determinations. It will not tell you how these emissions will be assessed other than to say that project sponsors are encouraged to mitigate them. It will not tell you how project shippers will be protected from imprudently incurred costs. This is the tyranny of vagueness. It is also a threat. Imagine the fear that will animate the mitigation “voluntarily” proposed by those project sponsors with pending applications who are facing millions of dollars in sunk costs and with shippers that have relied on projects being placed into service and now only have higher cost and less reliable options available. This policy statement cannot rightly be described as “encouraging” anything.[46]
Interim Policy Statement Proposes, and Takes, Unlawful Actions
The Interim Policy Statement, in its Entirety, is Based on the Wrong Premise
It is worth pausing to consider the underlying premise of the majority’s policy for considering GHG emissions, establishing a GHG emission threshold for preparing EISs, and requiring GHG emission mitigation. All are based on the presumption that GHG emissions are an “effect” of the proposed action.
In order to constitute an “effect,” three elements must be met: (1) there is a “change[] in the human environment,” that change (2) is “reasonably foreseeable,” and (3) it “has a reasonably close causal relationship to the proposed action or alternatives.”[47] The majority, however, does not allege that the change in the human environment at issue is the release of GHG emissions themselves. That makes sense, given that it would be like the Commission saying, in the hydropower context, that the flow of water from the powerhouse is a change in the human environment. While this would be an effect, it is not the kind of effect that is at issue in an environmental review. Instead, the effect we would care about would be the change to the quality or quantity of the body of water through which the water flows and any resultant further changes caused to species, vegetation, etc.
No, the majority is concerned about the changes in the human environment caused, not by the existence of GHG emissions themselves, but by climate change. The Interim Policy Statement is absolutely clear that this is its animating purpose: “The Commission is issuing this interim policy statement to explain how the Commission will assess the impacts of natural gas infrastructure projects on climate change”;[48] “Climate change is the variation in the Earth’s climate (including temperature, humidity, wind, and other meteorological variables) over time”;[49] “[C]limate change has resulted in a wide range of impacts across every region of the country and the globe. Those impacts extend beyond atmospheric climate change and include changes to water resources, agriculture, ecosystems, human health, and ocean systems.”[50]
The question therefore is not whether GHG emissions are reasonably foreseeable but whether climate change and its resulting effects are reasonably foreseeable and have a reasonably close causal relationship to the proposed action. And if so, whether those effects are significant and can be mitigated by the Commission.
While determining the environmental impacts of a project is done on a case-by-case basis, the construction of a natural gas pipeline and transportation of natural gas in that pipeline are unlikely, on a project-by-project basis, to have a reasonably foreseeable (which is to say traceable and calculable) effect on climate change “in most cases.”[51] Were climate change a reasonably foreseeable effect (as this term is used in environmental reviews) of a particular project, we would be able to examine the cause (here, the construction and the transportation of gas) and then determine some articulable and quantifiable effect (here, the amount of additional climate change) for which the project itself is causally responsible. We have never been able to do that. And while it is not acknowledged at all in the Interim Policy Statement’s procedural history, the Commission has repeatedly stated that “it cannot determine a project’s incremental physical impacts on the environment caused by GHG emissions,”[52] and CEQ has made similar statements.[53] Nothing in the Interim Policy Statement suggests this has changed nor has any new reasoning been offered to explain how we can better determine a quantifiable connection between the two.
The chain of causation is too attenuated for the cause and effect in this case to be considered to have a “reasonably close causal relationship.” The reasoning goes as follows: “changes to water resources, agriculture, ecosystems, human health, and ocean systems” occurring throughout the world result from global atmospheric changes that themselves result from the warming that itself results from increases in the world-wide concentration of GHGs that enter the atmosphere as the emissions released by using natural gas, that in the case of end uses (that is, not pipeline operational uses), results from the transportation of natural gas. The logical sequence is clear, but the causation is quite attenuated. And this attenuation cannot be shortened through the ploy of employing GHG emissions as a proxy for climate change.
Consideration of Effects on Climate Change from Non-jurisdictional Entities Violates the NGA and CEQ Regulations
The consideration of effects resulting from the upstream production or downstream use of natural gas violates the NGA and CEQ’s regulations.
The NGA authorizes the Commission to consider only those factors bearing on the “public convenience and necessity.”[54] The phrase “public convenience and necessity” is not “a broad license to promote the general public welfare.”[55] It does not permit the majority to conjure up its own meanings. As a “‘creature of statute,’”[56] the Commission must “look to the purposes for which the [Natural Gas Act] was adopted” to give it content and meaning.[57]
As the Court explained in NAACP v. FPC, “public convenience and necessity” means “a charge to promote the orderly production of plentiful supplies of electric energy and natural gas at just and reasonable rates.”[58] Simply put, the production and use of natural gas were not only presumed but were presumed to be in the public interest. Congress put its thumb on the scale in favor of gas and charged the Commission with ensuring that there would be adequate infrastructure in place to provide an abundant supply of natural gas available at reasonable prices for all Americans to use. The purpose of the NGA is narrow and clear. And it is a mousehole through which the elephant of addressing the climate change impacts of the entire natural-gas industry cannot pass.[59]
And while there were “subsidiary purposes” for the passage of the Natural Gas Act,[60] addressing the effects of climate change caused by using natural gas could not have been one of them. And even if it were, it is obvious that something that is “subsidiary” cannot, definitionally, override that which is primary. The majority cannot flip the NGA’s presumptions and consider the use of natural gas as intrinsically harmful, thus requiring mitigation. And it certainly cannot abandon our charge under the NGA to “promote the orderly production of plentiful supplies of . . . natural gas at just and reasonable rates”[61] by then weighing their determination that natural gas is harmful against the public interest when adjudicating section 3 and section 7 applications. This is directly contrary to the purpose Congress established the Commission to serve and supplants the judgment of Congress with that of the Commission. If that were not reason enough, it also invades jurisdictional territory that the courts have repeatedly held that Congress has reserved to the States.[62]
The majority cannot turn to the Supreme Court’s holding in Transco as authority.[63] In that case, the Court held that the Federal Power Commission lawfully denied a certificate based on two factors: first, that using natural gas to alleviate air pollution from burning coal was an inferior use, and second, the proposal would increase future prices.[64] It does not stand for the proposition that the Commission can consider adverse effects of air pollution, and thus climate change impacts, of using natural gas as the majority implies.[65]
Nor is the D.C. Circuit’s outlier opinion, Sabal Trail, as instructive as the majority seems to believe. It is very much in tension with prevailing Supreme Court precedent in Public Citizen, which held that agencies are only obligated to consider environmental effects to which their actions are the proximate cause.[66] Public Citizen explained that courts must look to the “underlying policies or legislative intent” of an agency’s organic statute to determine whether an agency is obligated to consider environmental effects.[67] The D.C. Circuit has also characterized Public Citizen as “explicit” that an agency is “not obligated to consider those effects . . . that could only occur after intervening action” by some other actor “and that only [that] actor[] . . . had the authority to prevent.”[68] In other words, when any potential effects are the result of the actions of third parties such as retail consumers, upstream production companies, and power generators, who may be several degrees of separation removed from the jurisdictional pipeline, those effects are outside the scope of what the agency must consider.
Thus, we should not rest too much weight upon Sabal Trail. Not only is the holding narrower than the majority seems to believe and was roundly criticized by the accompanying dissent,[69] its reasoning has since been called into question by another appellate court and I expect it will soon be challenged in the Supreme Court.[70]
In sum, environmental effects resulting from the upstream production and downstream use of gas are not factors bearing on the public convenience and necessity under the Natural Gas Act. Further, the CEQ’s regulations affirmatively prohibit those effects from being considered in an agency’s compliance with NEPA.[71]
The Significance Threshold is Illogical and Violates Regulations
In addition, the majority’s presumption that project emissions exceeding 100,000 tpy of CO2e will have a significant effect on the human environment is illogical and inconsistent with CEQ and Commission regulations.
The majority offers three irrelevant rationales for this presumption[72]: first, the threshold is administratively workable;[73] second, other agencies have established thresholds under different statutory schemes that are not based on a project’s effect on the climate; [74] and third, the threshold will “capture”[75] “99% of GHG emissions from Commission-regulated natural gas projects.”[76] It is worth noting that according to Commission staff, a 1 million tpy threshold would have covered 98.909% of emissions from natural gas projects authorized from 2017 through 2021, making the unsupported selection of the lower threshold both arbitrary and capricious.
The majority also states “even relatively minor GHG emissions pose a significant threat” “[b]ecause of the dire effects at stake.”[77] This rationale, however, is not supported by the evidence offered. The Commission does not explain how minor GHG emissions could lead to “dire effects.” We cannot just assume—this is administrative law—we must show evidence. More importantly, the rationale does not link a proposed project to effects on climate change. And for good reason. As CEQ declared: “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.”[78] The Commission has repeatedly agreed.[79]
On top of being illogical, the Interim Policy Statement effectively amends the Commission’s NEPA regulations without undergoing notice-and-comment procedures as required by the Administrative Procedure Act.[80] The Interim Policy Statement provides that an EIS will be prepared when the threshold is exceeded at full burn.[81] The Commission’s NEPA regulations, however, set forth specific categories of projects where an EA and EIS “will normally be prepared,”[82] with no mention of GHG emissions. And in a case where an EA is normally prepared, the Commission “may in specific circumstances”—meaning a case-by-case determination—decide whether to prepare an EIS “depending on the location or scope of the proposed action, or resources affected.”[83]
Given these fatal flaws, it is no wonder the majority seeks comment “in particular, on the approach to assessing the significance of the proposed project’s contribution to climate change.”[84]
GHG Mitigation
Claims of Authority to Mitigate
Next, the majority states that the Commission’s conditioning power gives it authority to require a pipeline to mitigate GHGs emitted by its operations and reasonably foreseeable indirect effects.[85] The majority is incorrect.
As commenters explain,[86] without any response from the majority, the Supreme Court has held that “Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions” from stationary sources.[87] By claiming the authority to mitigate these same emissions as part of the Natural Gas Act certification process, the majority are attempting to usurp the statutory authority the Court found Congress has delegated to EPA and which cannot be reassigned absent Congressional action.[88] If the EPA were to regulate GHG emissions from pipeline facilities, which it is contemplating doing,[89] the Commission could possibly require project sponsors to comply with those requirements. But one would not say that the Commission could on its own require project sponsors to mitigate, for example, sulfur dioxide because the EPA had chosen not to do so, or the Commission believed its regulations to be inadequate.
The Commission’s conditioning authority also does not allow the Commission to mitigate GHG emissions from upstream or downstream users. The commenters make the point,[90] also sidestepped by the majority,[91] that the Commission’s conditioning authority cannot be used to indirectly do what the Commission cannot do directly. That is, the Commission may not indirectly rely on the Natural Gas Act to impose conditions on non-jurisdictional entities.[92]
Further, the Commission’s conditioning authority cannot be used in ways that would be directly contrary to the purpose of the NGA—to promote the production of plentiful supplies of natural gas at reasonable rates. The majority may not rewrite the purpose of the NGA to instead charge the Commission with the mission of discouraging the production and use of natural gas.
Encouraging Project Sponsors to Mitigate GHG Emissions
The Interim Policy Statement’s encouragement that project sponsors mitigate GHG emissions is in practical effect a requirement,[93] and is not in accordance with the NGA. The NGA only empowers the Commission to impose terms and conditions in two contexts: (1) pursuant to NGA section 3 when it finds such terms “necessary or appropriate”[94] to ensure a proposed export or import facility is not inconsistent with the public interest, and (2) pursuant to NGA section 7, when it finds such terms are “reasonable” and “require[d]” by the “public convenience and necessity.”[95] Only after making these findings, can the Commission require mitigation.
The majority does not attempt to make either of these required findings. It simply leaps from stating that the Commission has the discretion to mitigate GHG emissions to “expecting” applicants to mitigate their emissions. This amounts to no more than “because I said so.” More is required.[96]
Intent of the Interim Policy Statement
One cannot help but notice the lengths to which the majority goes in order to make this policy statement “non-binding,” using words like “propose,” “wish,” “opportunity,” and even insisting, in response to this dissent, that it does not “impose[] an obligation, deny[y] a right, or fix[] some legal relationship,”[97] for what appears to have no purpose other than to avoid notice-and-comment procedures (that is, public participation) and judicial review. For without judicial review as a check, there is no need to engage in reasoned decision-making or be limited by the purposes of the statute.
In this way, the majority appears to believe it can do whatever it wants. Arrogate to the Commission authority it does not have. Disregard regulations that are currently in force. Flout prevailing Supreme Court precedent. Make threats to manipulate project sponsors into “voluntarily” subjecting themselves to unnecessary processes and proposing mitigation of the “harm” resulting from the proposed use or transportation of natural gas to provide a service that Congress declared to be in the public interest.
If an entity requests rehearing of today’s policy statement, the majority can simply reject it—either by notice or order (without any discussion of the merits)—stating that rehearing does not lie for policy statements. And if a petition for review follows, the Commission can argue that the Interim Policy Statement is not subject to review because it is not a substantive rule. And if some project sponsor suggests it is proposing mitigation under duress and it reserves the right to challenge the mitigation requirement in court, the Commission can argue the project sponsor cannot be aggrieved because it voluntarily proposed the mitigation and accepted the certificate and its terms.[98]
This is not good governance. Nor do I think it likely the majority will be successful. In my view, the Interim Policy Statement is a substantive, binding rule that is subject to judicial review. Despite the Interim Policy Statement’s hortatory verbiage, “there are sinews of command beneath the velvet words.”[99] Perhaps the best illustration of this is the list of six items project sponsors are “encouraged” to include in their applications in light of the new policy statement.[100] This list includes estimates of the proposal’s cumulative direct and indirect emissions and what mitigation measures the project sponsors propose, as well as a “detailed cost estimate” of the proposed mitigation and a “proposal for recovering those costs.”[101]
This is not encouragement. This is command. The project sponsors will know that if they want to win approval for their projects this is what they must do[102] even if they must guess at what will ultimately satisfy the Commission’s new policies. Certainly, no project sponsor will believe that mitigation is optional or that submitting an application exceeding the Interim Policy Statement’s 100,000 tpy threshold without a mitigation proposal would be anything other than a waste of time and money. And what other reason could the majority have for delaying action on those projects that have effectively twice completed the NEPA process?[103]
There is, however, no ambiguity in this: the Commission has changed the requirements for obtaining project approvals and applicants need to come before the Commission acknowledging that it is so.[104] The effect of this change is immediate. Even applicants whose projects have been pending with the Commission for upwards of two years will be subjected to the Commission’s new rules.
The interim policy statement also determines that emissions over 100,000 tpy of CO2e are significant (and emissions which fall below, not significant), a determination from which legal consequences flow under NEPA.[105] And it binds Commission staff.[106] While I acknowledge the courts have given the Commission’s characterization of issuances deference in the past, [107] whether a court will do so in in this instance is far from certain.
For these reasons, I respectfully dissent.
[1] Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews, 178 FERC ¶ 61,108 (2022) (Interim Policy Statement).
[2] But see Chairman Glick September 24, 2021 Response to Senator Barrasso September 15, 2021 Letter, Docket Nos. CP17-40-000, et al., at 1 (“When courts find flaws in the Commission’s analysis, it can lead to lengthy delays and cost developers substantially more than they originally forecasted.”) (Accession No. 20210927-4003); id. at 9 (“Ultimately, I believe that performing thorough permitting reviews and providing developers with legally durable certificates on which they can rely will do more than just about anything else to satisfy the purposes of the Natural Gas Act.”); Chairman Glick May 21, 2021 Response to Senator Hoeven April 29, 2021 Letter, Docket No. PL18-1-000, at 1 (“I believe we can make changes to the Certificate Process that enhance our efficiency in processing applications and better address various directives we have received from the appellate courts.”) (Accession No. 20210524-4014).
[3] Chairman Glick February 2, 2022 Response to Senator Barrasso December 15, 2021 Letter at 4 (Accession No. 20220202-4003); see also Commissioner Clements February 2, 2022 Response to Senator Barrasso December 15, 2021 Letter at 2 (Accession No. 20220202-4000) (“I will do my part to assure that the updated policy will be a legally durable framework for fairly and efficiently considering certificate applications – one that serves the public interest and increases regulatory certainty for all stakeholders.”).
[4] See, e.g., Algonquin Gas Transmission, LLC, 174 FERC ¶ 61,126 (2021) (Danly and Christie, Comm’rs, dissenting) (Briefing Order), terminated, 178 FERC ¶ 61,029 (2022) (Danly and Christie, Comm’rs, concurring in part and dissenting in part); see also Commission Staff May 27, 2021 Notice in Tenn. Gas Pipeline Co., L.L.C., Docket No. CP20-493-000 (Accession No. 20210527-3054) (announcing schedule for Environmental Impact Statement (EIS) for project with previously prepared Environmental Assessment (EA)); Commission Staff May 27, 2021 Notice in North Baja Pipeline, LLC, Docket No. CP20-27-000 (Accession No. 20210527-3052) (same); Commission Staff May 27, 2021 Notice in Columbia Gulf Transmission, LLC, Docket No. CP20-527-000 (Accession No. 20210527-3049) (same); Commission Staff May 27, 2021 Notice in Iroquois Gas Transmission System, L.P., Docket No. CP20-48-000 (Accession No. 20210527-3047) (same).
[5] Interim Policy Statement, 178 FERC ¶ 61,108 at P 1.
[6] Id.
[7] For example, the D.C. Circuit in Vecinos para Bienestar de la Comunidad Costera v. FERC (Vecinos) found that the Commission failed to “respond to significant opposing viewpoints” regarding its analysis of GHG emissions. Vecinos, 6 F.4th 1321, 1329 (D.C. Cir. 2021). It did not find “that the Commission failed to appropriately analyze the significance of three natural gas projects’ contribution to climate change . . . .” Interim Policy Statement, 178 FERC ¶ 61,108 at P 14.
[8] Interim Policy Statement, 178 FERC ¶ 61,108 at P 28.
[9] Id. (emphasis added) (footnotes omitted). I interpret “in most cases” as meaning the Commission will quantify and consider downstream emissions for NGA section 7 projects unless it is shown that the gas will not be burned. See id. P 28 n.72.
[10] See id. P 43.
[11] It should be noted that the majority cites Sierra Club v. FERC (Sabal Trail) to argue downstream emissions have a reasonably close causal relationship to NGA section 7 projects. Id. P 39 & n.103 (citing 867 F.3d 1357, 1372-73 (D.C. Cir. 2017) (Brown, J., concurring in part and dissenting in part)). Below I explain how Sabal Trail must not be given too much weight.
[12] Id. P 45.
[13] See id. P 52.
[14] See Midship Pipeline Co., LLC (Midship), 177 FERC ¶ 61,186 (2021) (Danly, Comm’r, dissenting at P 5) (“I, for one, am willing to consider the parties’ arguments and make a decision.”).
[15] Interim Policy Statement, 178 FERC ¶ 61,108 at P 79.
[16] See id. P 81.
[17] Despite the fact that CEQ’s regulations no longer distinguish between “direct” and “indirect” effects, in order to reduce confusion I use the term “direct” to be consistent with the Interim Policy Statement. See Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act, 85 Fed. Reg. 43,304, 43,343 (Jul. 16, 2020).
[18] But see 18 C.F.R. §§ 380.5-380.6 (setting forth when the Commission will prepare an EIS).
[19] See Interim Policy Statement, 178 FERC ¶ 61,108 at PP 103-05.
[20] Id. P 106; see also id. (“The Commission plans to evaluate proposed mitigation plans on a case-by-case basis . . . .”).
[21] See id. P 107.
[22] See id. P 105 (“However, as detailed below, the Commission’s priority is for project sponsors to mitigate, to the greatest extent possible, a project’s direct GHG emissions.”).
[23] Id. P 109.
[24] See id. P 125.
[25] See id.
[26] See id. PP 114-256; see also id. P 128 (“project sponsors wishing to purchase offsets”) (emphasis added).
[27] “As soon as the coin in the coffer rings, the soul from purgatory springs.” See Robert King, Only in America: Tax Patents and the New Sale of Indulgences, 60 Tax Law 761, 761 (2007) (citing Ronald H. Bainton, Here I Stand: A Life of Martin Luther 60 (1950)).
[28] See Interim Policy Statement, 178 FERC ¶ 61,108 at P 106 (“The Commission plans to evaluate proposed mitigation plans on a case-by-case basis and is not mandating a standard level of mitigation.”).
[29] For example, the Commission does not explain how the construction of a renewable energy or energy efficiency project reduces carbon emissions unless it could be shown that such construction will cause the retirement of, or prevent the construction of, a specific carbon emitting generation facility. Nor does the Commission describe how, in the absence of the identification of a specific facility to be displaced, it would be possible to determine the amount of mitigation provided by renewable energy or energy efficiency projects.
[30] See Interim Policy Statement, 178 FERC ¶ 61,108 at P 112 (“[W]e believe it best to allow project sponsors to demonstrate that their proposed mitigation measures are verifiable and propose means for the Commission to monitor or track the proposed measures through the life of the project.”).
[31] Id. P 105.
[32] See Certification of New Interstate Nat. Gas Facilities, 174 FERC ¶ 61,125, at P 17 (2021) (“C10. How could the Commission impose GHG emission limits or mitigation to reduce the significance of impacts from a proposed project on climate change? . . . If the Commission decides to impose GHG emission limits, how would the Commission determine what limit, if any, is appropriate?”).
[33] See Greenhouse Gas Mitigation, Technical Conference Transcript, Docket No. PL21-3-000 (Nov. 19, 2021).
[34] See Commission Staff November 16, 2021 Notice Inviting Technical Conference Comments, Docket No. PL21-3-000.
[35] 18 C.F.R. § 385.2201.
[36] I have anticipated a couple possible questions and will hazard answers that may be of interest: Will an EIS assess the adequacy of GHG mitigation or recommend GHG mitigation measures? My understanding is no. The Commission will determine the adequacy of mitigation on a case-by-case basis in its orders. Will mitigation that was not considered in an environmental document require the Commission to supplement its environmental review? A clear answer was not provided. It is worth noting that section 1502.9(d)(1)(i) of CEQ’s regulations state “Agencies . . . [s]hall prepare supplements to either draft or final environmental impact statements if a major Federal action remains to occur, and . . . [t]he agency makes substantial changes to the proposed action that are relevant to environmental concerns . . . .” 40 C.F.R. § 1502.9(d)(1)(i).
[37] Interim Policy Statement, 178 FERC ¶ 61,108 at P 98.
[38] Double E Pipeline, LLC, 173 FERC ¶ 61,074, at P 32 (2020).
[39] Interim Policy Statement, 178 FERC ¶ 61,108 at P 109.
[40] See, e.g., Algonquin Gas Transmission, LLC, 174 FERC ¶ 61,126 (2021) (Danly and Christie, Comm’rs, dissenting) (order establishing briefing to reopen final, non-appealable certificate order); Algonquin Gas Transmission, LLC, 178 FERC ¶ 61,029 (2022) (Danly and Christie, Comm’rs, concurring in part and dissenting in part) (order terminating briefing order but suggesting can reopen certificates to impose new terms).
[41] Interim Policy Statement, 178 FERC ¶ 61,108 at P 128.
[42] Id.
[43] Id. P 129.
[44] Id.
[45] Id. P 1.
[46] But see Voltaire, Candide 125 (J.H. Brumfitt ed., Oxford Univ. Press 1968) (1759) (“. . . pour encourager les autres.”).
[47] 40 C.F.R. § 1508.1(g).
[48] Interim Policy Statement, 178 FERC ¶ 61,108 at P 1.
[49] Id. P 6.
[50] Id. P 7 (citation omitted).
[51] Id. P 28. It is worth recalling that the Court has likened NEPA’s “reasonably close causal relationship” requirement to the “familiar doctrine of proximate cause from tort law,” Dep’t of Transp. v. Pub. Citizen, 541 U.S. 752, 767 (2004) (Public Citizen), and that a federal district court has found effects of climate change too attenuated for tort liability under state law. See Comer v. Murphy Oil USA, Inc., 839 F. Supp. 2d 849, 868 (S.D. Miss. 2012) (“The assertion that the defendants’ emissions combined over a period of decades or centuries with other natural and man-made gases to cause or strengthen a hurricane and damage personal property is precisely the type of remote, improbable, and extraordinary occurrence that is excluded from liability.”).
[52] See, e.g., Trans-Foreland Pipeline Co. LLC, 173 FERC ¶ 61,253, at P 31 (2020).
[53] See CEQ, Draft NEPA Guidance on Consideration of the Effects of Climate Change and Greenhouse Gas Emissions, at P 3 (2010), https://obamawhitehouse. archives.gov/sites/default/files/microsites/ceq/20100218-nepa-consideration-effects-ghg-draft-guidance.pdf.
[54] 15 U.S.C. § 717f(e).
[55] NAACP v. FPC, 425 U.S. 662, 669 (1976).
[56] Atl. City Elec. Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2002) (quoting Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001)).
[57] NAACP v. FPC, 425 U.S. at 669; see also FPC v. Transcon. Gas Pipe Line Corp., 365 U.S. 1, 17 (1961) (Transco) (“[I[t must be realized that the Commission’s powers under § 7 are, by definition, limited.”) (citing H.T. Koplin, Conservation and Regulation: The Natural Gas Allocation Policy of the Federal Power Commission, 64 Yale L.J. 840, 862 (1955)).
[58] NAACP v. FPC, 425 U.S. at 670 (emphasis added) (footnote omitted). As noted by Former Commissioner Bernard L. McNamee, this purpose was affirmed by later acts of Congress. See Adelphia Gateway, LLC, 169 FERC ¶ 61,220 (2019) (McNamee, Comm’r, concurring at PP 32-40).
[59] See Whitman v. Am. Trucking Ass’ns, Inc., 531 U.S. 457, 468 (2001).
[60] NAACP v. FPC, 425 U.S. at 670 (“While there are undoubtedly other subsidiary purposes contained in these Acts . . . .”) (footnote omitted); see also id. at 670 n.6.
[61] NAACP v. FPC, 425 U.S. at 670 (emphasis added).
[62] See Transco, 365 U.S. at 8 (“However, respondents correctly point out that Congress, in enacting the Natural Gas Act, did not give the Commission comprehensive powers over every incident of gas production, transportation, and sale. Rather, Congress was ‘meticulous’ only to invest the Commission with authority over certain aspects of this field leaving the residue for state regulation. Therefore, it is necessary to consider with care whether, despite the accepted meaning of the term ‘public convenience and necessity,’ the Commission has trod on forbidden ground in making its decision.”) (citation omitted); FPC v. Panhandle E. Pipe Line Co., 337 U.S. 498, 503 (1949) (“Congress . . . not only prescribed the intended reach of the Commission’s power, but also specified the areas into which this power was not to extend.”), accord ExxonMobil Gas Mktg. Co. v. FERC, 297 F.3d 1071, 1076 (D.C. Cir. 2002); S. Coast Air Quality Mgmt. Dist. v. FERC, 621 F.3d 1085, 1092 (9th Cir. 2010) (“In sum, the history and judicial construction of the Natural Gas Act suggest that all aspects related to the direct consumption of gas—such as passing tariffs that set the quality of gas to be burned by direct end-users—remain within the exclusive purview of the states.”); Pub. Utils. Comm’n. of Cal. v. FERC, 900 F.2d 269, 277 (D.C. Cir. 1990) (“[T]he state . . . has authority over the gas once it moves beyond the high-pressure mains into the hands of an end user.”).
[63] See Interim Policy Statement, 178 FERC ¶ 61,108 at P 103 n.243 (discussing Transco, 365 U.S. at 17).
[64] Transco, 365 U.S. at 4-7. In discussing whether consideration of end use was proper in the context of conservation, the Court also noted, “[t]he Commission said that it had not been given ‘comprehensive’ authority to deal with ‘the end uses for which natural gas is consumed’ and that it would not deny certification on that ground alone.” Id. at 15-16 (discussing F.P.C., The First Five Years Under the Natural Gas Act).
[65] Interim Policy Statement, 178 FERC ¶ 61,108 at P 103. Nor does the Federal Power Commission precedent, which the majority cites, support this proposition. See Adelphia Gateway, LLC, 169 FERC ¶ 61,220 (McNamee, Comm’r, concurring at P 29 n.64).
[66] 541 U.S. 752, 767-69.
[67] Id. at 767.
[68] Sierra Club v. FERC, 827 F.3d 36, 49 (D.C. Cir. 2016).
[69] See 867 F.3d at 1380 (Brown, J., concurring in part and dissenting in part) (“More significantly, today’s opinion completely omits any discussion of the role Florida’s state agencies play in the construction and expansion of power plans within the state—a question that should be dispositive.”).
[70] See Ctr. for Biological Diversity v. U.S. Army Corps of Eng’s, 941 F.3d 1288, 1299-1300 (11th Cir. 2019).
[71] 40 C.F.R. § 1508.1(g)(3) (“An agency’s analysis of effects shall be consistent with this paragraph (g).”); id. § 1508.1(g)(2) (“A ‘but for’ causal relationship is insufficient to make an agency responsible for a particular effect under NEPA. Effects should generally not be considered if they are remote in time, geographically remote, or the product of a lengthy causal chain. Effects do not include those effects that the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action.”).
[72] The relevant question on whether the Commission should prepare an EIS is whether the proposed action “[i]s likely to have significant effects.” 40 C.F.R. § 1501.3(a)(3).
[73] Interim Policy Statement, 178 FERC ¶ 61,108 at P 87 (“Establishing such a threshold will provide the Commission a workable and consistent path forward to analyze proposed projects. Further, a numerical threshold is a clear, consistent standard that can be easily understood and applied by the regulated community and interested stakeholders.”).
[74] Id. PP 90-95.
[75] Id. P 80.
[76] Id. P 95.
[77] Id. P 88.
[78] CEQ, Draft NEPA Guidance on Consideration of the Effects of Climate Change and Greenhouse Gas Emissions, at P 3 (2010), https://obamawhitehouse.archives.gov/ sites/default/files/microsites/ceq/20100218-nepa-consideration-effects-ghg-draft-guidance.pdf.
[79] See supra P 22 n.52.
[80] 5 U.S.C. § 553; see also Shell Offshore Inc. v. Babbitt, 238 F.3d 622, 629 (5th Cir. 2001) (“[T]he APA requires an agency to provide an opportunity for notice and comment before substantially altering a well established regulatory interpretation.”).
[81] Interim Policy Statement, 178 FERC ¶ 61,108 at P 3.
[82] 18 C.F.R §§ 380.5-380.6; see also Commissioner Danly November 29, 2021 Response to Senator Barrasso September 15, 2021 Letter, Docket Nos. CP20-27-000, et al., at 12, Fig. 2 (Accession No. 20211214-4001).
[83] 18 C.F.R. § 380.5(a) (emphasis added).
[84] Interim Policy Statement, 178 FERC ¶ 61,108 at P 1; see also id. P 81.
[85] Id. P 105
[86] Id. P 102 (“For example, commenters argue that Congress has delegated authority to the EPA and state agencies to regulate GHGs under the [Clean Air Act].”) (citation omitted); see also id. P 102 n.238 (citing American Public Gas Association Technical Conference Comments at 5-6; EEI Technical Conference Comments at 9-10; Enbridge Technical Conference Comments at 23-24; TC Energy Technical Conference Comments at 9-10).
[87] Am. Elec. Power Co., Inc. v. Connecticut, 564 U.S. 410, 426 (2011) (emphasis added) (discussing in the context of power plants but would apply equally here); see also Adelphia Gateway, LLC, 169 FERC ¶ 61,220 (2019) (McNamee, Comm’r, concurring at PP 52-61).
[88] Whether EPA or CEQ have raised “objections” is not relevant. See Interim Policy Statement, 178 FERC ¶ 61,108 at P 85.
[89] Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review, 86 Fed. Reg. 63,110 (Nov. 15, 2021). Commenters make the point, to which the majority does not respond, that the Commission should defer to EPA’s rulemaking. See, e.g., EEI Technical Conference Comments at 11 n.29.
[90] See id. P 101.
[91] See id. P 104 (“we recognize, as many commenters assert, that the Commission does not have the statutory authority to impose conditions on downstream users or other entities outside the Commission’s jurisdiction . . . rather, the Commission encourages each project sponsor to propose measures . . . .”) (emphasis in original).
[92] See Altamont Gas Transmission, Co. v. FERC, 92 F.3d 1239, 1248 (D.C. Cir. 1996) (“Although the Commission ordinarily has the authority to consider a matter beyond its jurisdiction if the matter affects jurisdictional sales—at least if there would otherwise be a regulatory gap—here there is no such gap but, on the contrary, an express congressional reservation of jurisdiction to another body.”); Am. Gas Ass’n v. FERC, 912 F.2d 1496, 1510 (“[T]he Commission may not use its § 7 conditioning power to do indirectly . . . things that it cannot do at all.”); see also Calpine Corp., 171 FERC ¶ 61,035 (2020) (Glick, Comm’r, dissenting at P 7) (“In recent years, the Supreme Court has repeatedly admonished both the Commission and the states that the FPA prohibits actions that ‘aim at’ or ‘target’ the other sovereign’s exclusive jurisdiction.”).
[93] See Interim Policy Statement, 178 FERC ¶ 61,108 at P 106 (“The Commission plans to evaluate proposed mitigation plans on a case-by-case basis . . . .”) (emphasis added); id. P 130 (“the Commission will then consider the project’s impact on climate change, including the project sponsor’s mitigation proposal to reduce direct GHG emissions and, to the extent practicable, to reduce any reasonably foreseeable project emissions . . . .”).
[94] 15 U.S.C. § 717b(a).
[95] Id. § 717f(e).
[96] See also Michigan v. EPA, 576 U.S. 743, 752 (2015) (explaining that the phrase “appropriate and necessary” in the Clean Air Act “requires at least some attention to cost”); id. (“One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”); id. 752-53 (“Agencies have long treated cost as a centrally relevant factor when deciding to regulate.”).
[97] See Interim Policy Statement, 178 FERC ¶ 61,108 at P 5, n.6.
[98] I recognize that project sponsors have previously reserved their right to appeal when accepting a certificate, which the Commission has not opposed. However, in the context of hydropower cases, the Commission has taken a different approach. See Rivers Elec. Co., Inc., 178 FERC ¶ 61,027, P 9 n.25 (2022) (Danly, Comm’r, concurring in part and dissenting in part) (“If the transferee accepts this order, it is thereby agreeing to the new condition. It may decline to do so if it does not wish to accept the condition.”).
[99] Am. Trucking Ass’n, Inc. v. I. C. C., 659 F.2d 452, 463 (5th Cir. 1981), opinion clarified on other grounds, 666 F.2d 167 (5th Cir. 1982) (Am. Trucking).
[100] Interim Policy Statement, 178 FERC ¶ 61,108 at P 129.
[101] Id.
[102] Cf. Am. Trucking, 659 F.2d at 463-464 (“The manner of dealing with applicants who do not follow what is declared to be the ‘normal’ course demonstrates graphically that the carrier who does not conform will incur both delay and potentially vast litigation expense”).
[103] For example, on August 24, 2020, Commission staff issued an EA for Tennessee Gas Pipeline Company, LLC et al.’s Evangeline Pass Expansion Project which concluded, “[w]e recommend that the Commission Order contain a finding of no significant impact.” Commission Staff, Environmental Assessment for Tenn. Gas Pipeline Co., LLC et al.’s Evangeline Pass Expansion Project, Docket Nos. CP20-50-000 et al., at 168 (Aug. 24, 2020). Despite this recommendation, which would have normally been adopted by the Commission, Commission staff, at the direction of the Chairman, issued supplemental Draft and Final Environmental Impact Statements. See Commission Staff, Final Environmental Impact Statement for Tenn. Gas Pipeline Co., LLC et al.’s Evangeline Pass Expansion Project, Docket Nos. CP20-50-000 et al. (Oct. 8, 2021); Commission Staff, Draft Environmental Impact Statement for Tenn. Gas Pipeline Co., LLC et al.’s Evangeline Pass Expansion Project, Docket Nos. CP20-50-000 et al. (July 16, 2021).
[104] See Brown Exp., Inc. v. United States, 607 F.2d 695, 701 (5th Cir. 1979) (“An announcement stating a change in the method by which an agency will grant substantive rights is not a ‘general statement of policy.’”).
[105] See Nat. Res. Def. Council, Inc. v. NRC, 539 F.2d 824 (2d Cir. 1976) (“Further, it is clear that NEPA legal consequences flow from that decision since the order below sets forth rules concerning how the agency will comply with the environmental laws.”), cert. granted, 430 U.S. 944 (1977), judgment vacated and case remanded for consideration of mootness, 434 U.S. 1030 (1978).
[106] Interim Policy Statement, 178 FERC ¶ 61,108 at P 3 (“For purposes of assessing the appropriate level of NEPA review, Commission staff will apply the 100% utilization or ‘full burn’ rate for the proposed project’s emissions to determine whether to prepare an Environmental Impact Statement (EIS) or an environmental assessment (EA). Commission staff will proceed with the preparation of an EIS, if the proposed project may result in 100,000 metric tons per year of CO2e or more.”) (emphasis added); see also Tex. v. Equal Emp’t Opportunity Comm’n, 933 F.3d 433, 441-44 (5th Cir. 2019); id. at 442 (“That the agency’s action binds its staff . . . demonstrates that legal consequences flow from it . . . .”).
[107] See, e.g., Interstate Nat. Gas Ass’n of Am. v. FERC, 285 F.3d 18, 59 (D.C. Cir. 2002).