Commissioner James Danly Statement
April 21, 2022
Docket No. CP20-493-000
I concur with the decision to grant the Natural Gas Act (NGA) section 7(c)[1] authorization requested by Tennessee Gas Pipeline Company, L.L.C. (Tennessee).[2] I write separately to express a handful of points.
First, I disagree with the Commission’s determination that “the [greenhouse gas (GHG)] emissions from the downstream combustion of the gas transported by the project are reasonably foreseeable emissions.”[3] The facts here, like in Food & Water Watch v. FERC,[4] involve adding capacity to provide incremental transportation service to a local distribution company (LDC). And I recognize that the court “concluded that the end use of the transported gas is reasonably foreseeable.”[5] 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.”[6] I am not convinced that the LDCs involved here and the discrete, known generators at issue in Sierra Club v. FERC (Sabal Trail)[7] 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,[8] Sabal Trail, which Food & Water Watch applies, is inconsistent with the Supreme Court’s holding in Department of Transportation v. Public Citizen.[9] My views are not idiosyncratic. Both the dissenting opinion in Sabal Trail and the Court of Appeals for the Eleventh Circuit agree.[10]
Second, as I previously stated,[11] while not fatal to this order’s durability, 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 and the statutory authority to impose it, have amounted to little more than picking arbitrary numbers.[17]
In now stating in 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 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]
Fourth, although I agree that the Commission must act “in accordance with our . . . statutory duties,” [26] it is necessary to take a moment to explain the scope of the public convenience and necessity standard. The Supreme Court has found that NGA section “7(e) requires the Commission to evaluate all factors bearing on the public interest.”[27] This obligation, however, is not unlimited in scope and this requirement cannot be read in a vacuum. The Supreme Court has explained that the inclusion of the term “public interest” in our statute is not “a broad license to promote the general public welfare”—instead, it “take[s] meaning from the purposes of the regulatory legislation.”[28] We must then turn to the purpose of the NGA, which the Supreme Court has instructed us is “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[29] To the extent to which any of the Commission’s recent or future certificate issuances attempt to expand the subjects considered in the Commission’s balancing under the public convenience and necessity standard, as contemplated in the now-draft Updated Certificate Policy Statement, I reiterate my view that any balancing regime the Commission employs must “take meaning” from the purpose of the NGA.
Finally, I wish to highlight the unnecessary delay of today’s issuance. It has been over 21 months since Tennessee filed its application;[30] over 14 months since the Commission issued an Environmental Assessment (EA) for the project;[31] and over six months after the requested action date that Tennessee stated was necessary to obtain the “regulatory permits and to complete the acquisition of property for the new compressor station location, materials, procurement, and construction of the Project in a time frame compatible with the November 1, 2022 in-service date requested by the Project Shipper.”[32] Tennessee and its project shipper, Consolidated Edison of New York (Con Ed), have filed comments requesting immediate Commission action.[33]
One cannot help but wonder about the purpose of the Commission’s delay. There was no need for the Commission to issue supplemental draft and final Environmental Impact Statements (EISs).[34] The D.C. Circuit has not stated that an EA is inadequate for the consideration of projects’ GHG emissions.[35] The Commission could have quantified direct and downstream emissions and placed those emissions into context in an order.
There is no doubt that the Commission delayed action on this and other certificates in order to issue the Updated Certificate Policy Statement and Interim GHG Policy Statement first.[36] My colleagues have claimed that those policy statements were necessary to provide a legally durable framework for certificate orders going forward.[37] And yet those policy statements are now in draft form,[38] they are no longer in effect, but here we are acting on certificate orders.
Of course, one cannot help but notice the Commission inserting elements of the now-draft policy statements. The order notes whether the project shipper is an affiliate of Tennessee in the project need discussion. [39] How to consider affiliate precedent agreements is a subject of the draft Updated Certificate Policy Statement. [40] In addition, the order calculates downstream emissions using a “85% historical utilization rate.”[41] Use of a projected utilization rate is a proposal in the now draft Interim GHG Policy Statement,[42] The Commission did not previously consider projected utilization rates.[43]
The order then goes on to explain that the Commission will “consider documented offsets of GHG emissions when determining the level of downstream GHG emissions associated with a project” when applicants provide “sufficient information”—i.e., a lifecycle study similar to that which Iroquois Gas Transmission System, L.P. provided.[44] Again, another element of the Interim GHG Policy Statement.[45] Then in response to the U.S. Environmental Protection Agency’s recommendation that the Commission require GHG mitigation, the order notes Tennessee’s voluntary participation in emission reduction initiatives.[46] Notably absent from the order—a discussion on the Commission’s authority to impose GHG mitigation measures.
Why bother with issuing policy statements that attract attention when you can just change the policy in serial adjudications with a limited number of parties and a now certificate holder that has no incentive to appeal?
For these reasons, I respectfully concur in the judgment.
[1] 15 U.S.C. § 717f(c).
[2] See Tenn. Gas Pipeline Co., L.L.C., 179 FERC ¶ 61,041 (2022) (Tennessee).
[3] Id. P 49.
[4] 28 F.4th 277 (D.C. Cir. 2022) (Food & Water Watch).
[5] Id. at 289.
[6] Id. (emphasis added); see also Brief of Respondent-Intervenors Tennessee Gas Pipeline Co., L.L.C. and Eversource Energy Service Company at 28, Food & Water Watch, 28 F.4th 277 (D.C. Cir. 2022) (No. 20-1132), 2020 WL 6696078, at 28(“Columbia Gas explained it needs ‘the new capacity from the 261 Upgrade Projects to provide reliable service to its existing customers.’ As Columbia Gas further explained, it ‘needs the increased capacity and delivery pressure to be provided by these projects in order to provide reliable service to its existing customers.’ And, in approving Columbia Gas’ contract with Tennessee, the Massachusetts [Department of Public Utilities (DPU)] agreed. The Massachusetts DPU found the capacity Columbia Gas was acquiring was ‘replacement capacity, from which no additional greenhouse gas emissions will result.’ To the extent the gas would support new customers, those customers were ‘converting from oil heating to natural gas, and therefore, the [Massachusetts DPU] expects that the acquisition of the proposed capacity will further reduce greenhouse gas emissions.’”) (internal citations omitted) (emphasis in original).
[7] 867 F.3d 1357 (D.C. Cir. 2017).
[8] See Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Reviews, 178 FERC ¶ 61,108 (2022) (Danly, Comm’r, dissenting at P 29) (Interim GHG Policy Statement); see also Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,197, at P 2 (2022) (converting the two policy statements issued on February 18, 2022, Interim GHG Policy Statement, 178 FERC ¶ 61,108 and Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,107 (2022) (Updated Certificate Policy Statement), to “draft” policy statements) (Order on Draft Policy Statements).
[9] 541 U.S. 752 (2004) (Public Citizen).
[10] See Sabal Trail, 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] See Tennessee, 179 FERC ¶ 61,041 at P 49 n.93 (citing N. Nat. Gas Co., 174 FERC ¶ 61,189 (2021) (Danly, Comm’r, concurring in part and dissenting in part) (Northern)). In Northern, a majority of my colleagues established what has been referred to (by some) as the “eyeball” test. See Catherine Morehouse, Glick, Danly spar over gas pipeline reviews as FERC considers project’s climate impacts for first time, Util. Dive (Mar. 19, 2021), https://www.utilitydive.com/news/glick-danly-spar-over-gas-pipeline-reviews-as-ferc-considers-projects-cli/597016/ (“‘We essentially used the eyeball test,’ [Chairman Glick] said, adding that based on that analysis, ‘it didn’t seem significant in terms of the impact of those emissions on climate change.’”).
[13] Dominion Transmission, Inc., 163 FERC ¶ 61,128, at P 67 (2018) (citation 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 Interim GHG Policy Statement, 178 FERC ¶ 61,108 at PP 79-81 (establishing a significance threshold of 100,000 metric tons per year of CO2e); id. (Danly, Comm’r, dissenting at PP 32-36) (explaining why the majority’s presumptive significance threshold is illogical); see also Northern, 174 FERC ¶ 61,189 (Danly, Comm’r, concurring in part and dissenting in part at P 16) (comparing the Northern test to “like posting a speed limit sign with a question mark instead of a number, leaving it to the police officer to decide arbitrarily whether you were speeding”).
[18] Tennessee, 179 FERC ¶ 61,041 at P 49.
[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.”) (citation omitted); Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 (2022) (Glick, Chairman, concurring at P 5) (“I would have preferred to apply Northern Natural here and would have concluded based on evidence in the record that the relevant 145,000 metric tons per year of GHG emissions are not significant.”) (citation omitted) (Tennessee Gas).
[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.”) (emphasis added) (citation omitted); 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)); 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 Tennessee, 179 FERC ¶ 61,041 at P 61.
[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) (emphasis added) (citation omitted).
[26] Tennessee, 179 FERC ¶ 61,041 at P 68 n.150 (“[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 duties.”) (citing 15 U.S.C. § 717f; 18 C.F.R. § 380.12(g) (requiring applicants to submit information about the socioeconomic impact area of a project for the Commission’s consideration during NEPA review); FERC, Guidance Manual for Environmental Report Preparation at 4-76 to 4-80 (Feb. 2017), https://www.ferc.gov/sites/default/files/2020-04/guidance-manual-volume-1.pdf.).
[27] Atl. Ref. Co. v. Pub. Serv. Comm’n of N.Y., 360 U.S. 378, 391 (1959).
[28] NAACP v. Fed. Power Comm’n, 425 U.S. 662, 669 (1976) (NAACP).
[29] Id. at 669-70; accord Myersville Citizens for a Rural Cmty., 783 F.3d 1301, 1307 (D.C. Cir. 2015) (quoting NAACP, 425 U.S. at 669-70). I note that the Supreme Court has also recognized the Commission has authority to consider “other subsidiary purposes,” such as “conservation, environmental, and antitrust questions.” NAACP, 425 U.S. at 670 & n.6 (citations omitted). But all subsidiary purposes are, necessarily, subordinate to the statute’s primary purpose.
[30] See Tennessee Gas Pipeline Company, L.L.C., Abbreviated Application for a Certificate of Public Convenience and Necessity to Construct, Install, Modify, Operate, and Maintain Certain Compression Facilities, Docket No. CP20-493-000 (June 30, 2020) (Application).
[31] See Commission Staff, Environmental Assessment for East 300 Upgrade Project, Docket No. CP20-493-000. (Feb. 19, 2020).
[32] See Application at 1-2 (listing September 30, 2021 as the requested action by date).
[33] See Tennessee Gas Pipeline Co., L.L.C. December 23, 2021 Limited Reply Comments to Comments of U.S. Environmental Protection Agency on Final Environmental Impact Statement, Docket No. CP20-493-000, at 9 (“Commission action is needed now to ensure the Project can be completed and placed in service in a timely manner.”); Consolidated Edison Co. of New York, Inc., December 21, 2021 Motion for Leave to Answer and Answer, Docket No. CP20-493-000, at 2 (“Con Edison respectfully requests that the Commission issue the requested certificate as soon as possible to avoid delays to the Project so that Con Edison may end its need to rely on trucked [compressed natural gas] for peak day needs, lift the moratorium, and provide gas service to its customers who request it.”).
[34] See Commission Staff, Draft Environmental Impact Statement for the East 300 Upgrade Project, Docket No. CP20-493-000 (July 2, 2021); Commission Staff, Final Environmental Impact Statement for the East 300 Upgrade Project, Docket No. CP20-493-000 (Sept. 24, 2021).
[35] The D.C. Circuit recently upheld the Commission’s assessment of direct GHG emissions in an Environmental Assessment. See Food & Water Watch, 28 F.4th at 289-90. Notably, the D.C. Circuit in Food & Water Watch does not require the preparation of an EIS, but instead, on remand requires that 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 289 (emphasis added).
[36] Commissioner Danly March 2, 2022 Letter in Response to Senator Barrasso’s Letter Dated February 15, 2022, Docket Nos. PL18-1-000, et al., at 5-7, https://www.ferc.gov/news-events/news/commissioner-james-danly-letter-senator-barrasso.
[37] 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.”).
[38] See Order on Draft Policy Statements, 178 FERC ¶ 61,197 at P 2 (“Upon further consideration, we are making the Updated [Certificate] 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.”) (citations omitted).
[39] Tennessee, 179 FERC ¶ 61,041 at P 15 (“ConEd, the project shipper unaffiliated with Tennessee”) (emphasis added).
[40] See Updated Certificate Policy Statement, 178 FERC ¶ 61,107 at P 60.
[41] Tennessee, 179 FERC ¶ 61,041 at P 51.
[42] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 at PP 50-51 (“Because in most instances a 100% utilization rate estimate does not accurately capture the project’s climate impacts, estimated emissions that reflect a projected utilization rate will provide more useful information. . . . The project sponsor is encouraged to file its projected utilization rate, as well as its justification for the rate and any supporting evidence, in its application for authorization under NGA section 3 or 7.”).
[43] Id. P 49 (“In previous environmental documents and certificate orders, the Commission has disclosed a project’s operational emissions . . . by assuming a 100% utilization rate estimate of the project (e.g., the maximum capacity is transported 365 days per year, 24 hours a day and fully combusted downstream).”).
[44] Tennessee, 179 FERC ¶ 61,041 at P 53.
[45] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 at P 29 (“The Commission will also consider evidence of factors expected to reduce or offset the estimated direct or reasonably foreseeable downstream emissions of the project.”); see id. P 129 (“A project sponsor for any new natural gas infrastructure project is encouraged to include the following in its NGA section 3 or 7 application . . . evidence, if any, that impacts the quantification of the project’s reasonably foreseeable GHG emissions.”).
[46] See Tennessee, 179 FERC ¶ 61,041 at P 58.