Commissioner James Danly Statement
March 25, 2022
Docket Nos. CP20-50-000, CP20-51-000
I concur in the Commission’s decision to grant the requested Natural Gas Act (NGA) section 7[1] authorizations to Tennessee Gas Pipeline Company, L.L.C. and Southern Natural Gas Company, L.L.C (collectively, Applicants).[2] In an order issued concurrently with this one, the Commission announces that it is “making the Updated [Certificate] Policy Statement and the Interim [Greenhouse Gas Emissions (GHG)] Policy Statement draft policy statements.”[3] I agree with the Commission’s decision to not apply the Updated Certificate Policy Statement[4] and the Interim GHG Policy Statement[5] to this proceeding. I write separately to express a few clarifications regarding my position.
First, while not fatal to the durability of the order, I would have explicitly repudiated Northern Natural Gas Company[6] and reaffirmed the Commission’s prior position that “[w]ithout an accepted methodology, the Commission cannot make a finding whether a particular quantity of [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.”[7] 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.[8] The Council on Environmental Quality (CEQ) has found similarly.[9] And the Commission’s now-draft Interim GHG Policy Statement[10] does not alter these determinations.[11]
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.[12] The Commission’s erstwhile attempt to establish its own significance threshold demonstrates just that. Finding no standard upon which they could properly rely, my colleagues simply picked a number—one which, I understand, was not offered in any of the more than 35,000 comments[13]—and attempted to justify that arbitrary number with rationales that were either irrelevant to the issue of environmental harm or were not supported by the record.[14]
Project sponsors are now left wondering whether the Commission’s departure from Northern is temporary, and if so, for how long. And while it would normally be prudent to plan for its return, how does one plan for a policy that creates a test with no standards?[15] I suppose, given recent issuances, that project sponsors at least now know that the Commission will not assess whether the project has a significant impact on climate change should the project result in a net reduction of GHG emissions.[16] Nor will the Commission calculate the Social Cost of Carbon from project emissions in those circumstances.[17] I cannot help but wonder if the Commission offers this lone island of certainty in a maneuver to encourage the development of a certain type of project or GHG mitigation plan.
Second, regarding the inclusion of a calculation of the Social Cost of Carbon from the project’s emissions,[18] 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.[19] Nothing can be gleaned from the numbers calculated by Commission staff in today’s order.
I would also like to point to the Commission’s recognition that “Sierra Club and the Institute for Policy Integrity, citing [Vecinos para el Bienestar de la Comunidad Costera v. FERC, 6 F.4th 1321 (D.C. Cir. 2021) (Vecinos)], argue that 40 C.F.R. § 1502.21(c)(4) requires that the Commission apply the social cost of carbon protocol to its consideration of the project’s climate impacts.”[20] The commenters blatantly misread the holding of that case. 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.”[21] This is a narrow holding and, try as litigants might, 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. As a final note, I should reiterate that the Social Cost of Carbon was not developed for project level review and therefore its use is not mandated for evaluating impacts under section 1502.21 of the CEQ’s regulations.[22]
Third, it is worth discussing footnote 103 in today’s order.[23] That footnote states that “[w]hile 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 duty to evaluate all factors bearing on the public interest.”[24] Indeed, the Supreme Court has found that NGA section “7(e) requires the Commission to evaluate all factors bearing on the public interest.”[25] This finding, however, cannot be read in a vacuum. The Court has explained that the inclusion of the phrase “public interest” in a statute is not “a broad license to promote the general public welfare”—instead, it “take[s] meaning from the purposes of the regulatory legislation.”[26] We must then turn to the purpose of the NGA: “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[27] Any balancing under the public convenience and necessity standard must “take meaning” from that purpose.
Finally, I wish to highlight the unnecessary delay of today’s issuance. It has been over two years since the Applicants filed their requests for certificate authorizations;[28] over nineteen months since the Commission issued an Environmental Assessment (EA) for the projects;[29] and over thirteen months after the Applicants’ requested action dates.[30]
One cannot help but wonder what the purpose was for the Commission’s delay. The Chairman says he was able to determine that the “relevant 145,000 metric tons per year of GHG emissions are not significant.”[31] Could he not have made that determination based on the contents of the EA? The EA quantified the relevant emissions,[32] and there is no reason for issuing a draft and final Environmental Impact Statements simply to add, “we are unable to come to a conclusion regarding the significance of the Project’s contribution to climate change.”[33] The D.C. Circuit has not stated that an EA is inadequate for the consideration of projects’ GHG emissions.[34]
There is no doubt that the Commission has delayed action on this and other certificates in order to issue the Updated Certificate Policy Statement and Interim GHG Policy Statement first.[35] My colleagues have claimed that those policy statements were necessary to provide a legally durable framework for certificate orders going forward;[36] and that those policies were the “first step in addressing the uncertainty and delay associated with the Commission’s review of proposed natural gas infrastructure projects.”[37] And yet those policy statements are now in draft form, they are no longer in effect, but here we are acting on certificate orders.[38]
For these reasons, I respectfully concur in the judgment.
[1] 15 U.S.C. § 717f(c) and (e).
[2] See Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 (2022) (Tennessee).
[3] Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,197, at P 2 (2022) (Order on Draft Policy Statements).
[4] Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,107 (2022) (Updated Certificate Policy Statement).
[5] Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Revs., 178 FERC ¶ 61,108 (2022) (Interim GHG Policy Statement).
[6] N. Nat. Gas Co., 174 FERC ¶ 61,189, at PP 29-36 (2021) (Danly, Comm’r, concurring in part and dissenting in part) (Northern).
[7] Dominion Transmission, Inc., 163 FERC ¶ 61,128, at P 67 (2018) (citation omitted).
[8] See, e.g., Nat. Fuel Gas Supply Corp., 158 FERC ¶ 61,145, at P 188 (2017).
[9] See CEQ, Draft [National Environmental Policy Act (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 (“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.”).
[10] See Order on Draft Policy Statements, 178 FERC ¶ 61,197 at P 2.
[11] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 (2022) (Danly, Comm’r, dissenting at P 22) (“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,’ and CEQ has made similar statements.”) (citations omitted).
[12] See, e.g., Mountain Valley Pipeline, LLC, 163 FERC ¶ 61,197, at P 292 (2018).
[13] Interim GHG Policy Statement, 178 FERC ¶ 61,108 at P 19.
[14] Id. (Danly, Comm’r, dissenting at PP 33-34).
[15] See Northern, 174 FERC ¶ 61,189 (Danly, Comm’r, concurring in part and dissenting in part at PP 15-16); id. 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”).
[16] Iroquois Gas Transmission Sys., L.P., 178 FERC ¶ 61,200, at P 56 (2022) (Danly, Comm’r, concurring in the judgment).
[17] Id. P 59.
[18] See Tennessee, 178 FERC ¶ 61,199 at P 93.
[19] 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.”).
[20] Tennessee, 178 FERC ¶ 61,199 at P 91 (2022).
[21] Vecinos, 6 F.4th at 1329.
[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 rulemakings.” 164 FERC ¶ 61,099, at P 35 (2018) (emphasis added).
[23] Tennessee, 178 FERC ¶ 61,199 at P 78 n.103.
[24] Id. (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.) (emphasis added).
[25] Atl. Ref. Co. v. Pub. Serv. Comm’n of N.Y., 360 U.S. 378, 391 (1959).
[26] NAACP v. Fed. Power Comm’n, 425 U.S. 662, 669 (1976) (NAACP).
[27] Id. at 669-70; accord Myersville Citizens for a Rural Cmty., 783 F.3d 1301, 1307 (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.
[28] See Tennessee Gas Pipeline Company, L.L.C., Abbreviated Application for a Certificate of Public Convenience and Necessity, Docket No. CP20-50-000 (Feb. 7, 2020) (Tennessee Application); Southern Natural Gas Company, L.L.C., Application for Certificate of Public Convenience and Necessity under Section 7 of the NGA (Feb. 7, 2020) (Southern Application).
[29] See Commission Staff, Environmental Assessment for the Evangeline Pass Expansion Project, Docket Nos. CP20-50-000 and CP20-51-000 (Aug. 24, 2020) (Environmental Assessment).
[30] See Tennessee Application at 3 (listing January 31, 2021 as the requested action by date); Southern Application at 1 (same).
[31] Tennessee, 178 FERC ¶ 61,199 (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.”).
[32] See Environmental Assessment at Tables 25-28.
[33] Tennessee Gas Pipeline Company, LLC, et al., Final Environmental Impact Statement for the Evangeline Pass Expansion Project, Docket Nos. CP20-50-000 and CP20-51-000, at 49 (Oct. 8, 2021); Tennessee Gas Pipeline Company, LLC, et al., Draft Environmental Impact Statement for the Evangeline Pass Expansion Project, Docket Nos. CP20-50-000 and CP20-51-000, at 20 (July 16, 2021).
[34] The D.C. Circuit recently upheld the Commission’s assessment of direct GHG emissions in an Environmental Assessment. See Food & Water Watch v. FERC, No. 20-1132, --- F.4th ---, 2022 WL 727037, at *9 (D.C. Cir. Mar. 11, 2022). Notably, the D.C. Circuit in Food & Water Watch does not require the preparation of an Environmental Impact Statement, but instead, on remand requires the Commission “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.” Id. at *8 (emphasis added).
[35] Commissioner Danly March 2, 2022 Letter to Senator Barrasso, Docket Nos. PL18-1-000, et al., at 5-7, https://www.ferc.gov/news-events/news/commissioner-james-danly-letter-senator-barrasso.
[36] See, e.g., Written Testimony of Chairman Richard Glick for March 3, 2022 Senate Energy and Natural Resources Committee Hearing, at 9, https://www.energy. senate.gov/services/files/270F8F6E-C554-43CF-B683-EB60583873D8 (“The principal purpose of the Interim Greenhouse Gas Policy Statement is to provide a framework for considering reasonably foreseeable greenhouse gas emissions in our analysis under NGA sections 3 and 7 that is consistent with binding court precedent.”); Transcript of the 1087th Meeting, FERC, at 36-37 (Feb. 17, 2022), https://www.ferc.gov/news-events/events/february-17-2022-virtual-open-meeting-02172022 (Commissioner Clements stated, “I think [the Updated Certificate Policy Statement] is an important step towards establishing a framework for making wise and legally durable decisions that account for the complexities of an energy system undergoing profound transformation.”).
[37] Written Testimony of Commissioner Willie L. Phillips for March 3, 2022 Senate Energy and Natural Resources Committee Hearing, at 2, https://www.energy. senate.gov/services/files/ 794290C0-191C-4AF9-A747-E3108A111CEB.
[38] See Order on Draft Policy Statements, 178 FERC ¶ 61,197 at P 2 (“Upon further consideration, we are making the Updated Policy Statement and the Interim GHG Policy Statement draft policy statements. . . . The Commission will not apply the Updated Draft Policy Statement or the Draft GHG Policy Statement to pending applications or applications filed before the Commission issues any final guidance in these dockets.”).