Commissioner James Danly Statement
December 16, 2022
Docket No. CP21-29-001
I concur in the result in this order on rehearing.[1] I direct the reader to my separate statement to the underlying Certificate Order.[2] In that statement, I concurred in the judgment,[3] agreeing with the Commission’s decision to issue a Natural Gas Act (NGA) section 7[4] authorization to Gas Transmission Northwest LLC. There, I highlighted several flaws in the Commission’s issuance.[5]
Columbia Riverkeeper asserts that the Commission should have considered recent developments in state and federal climate policy in determining whether there is a need for the Project;[6] I disagree. The need for this project is readily apparent: “[t]he proposed project will benefit GTN’s customers by alleviating delivery pressure concerns and therefore increas[e] system reliability.”[7] Whether or not a party presents evidence that a state “statute[] purport[s] to ban natural gas” is irrelevant to the inquiry required under section 7 of the Natural Gas Act.[8] [9] And while states may enact policies that have an effect on the ultimate consumers of natural gas (generators, gas appliances and the like), these enactments cannot impair the Commission’s exclusive jurisdiction over the “transportation of natural gas in interstate commerce” and “the sale in interstate commerce of natural gas for resale.”[10] To the extent to which Columbia Riverkeeper has advanced an argument that state restrictions on natural gas displace FERC’s authority and obligations under section 7 of the Natural Gas Act, those arguments are unavailing.
As for the Commissions’ response, its observation that particular state enactments “d[o] not prohibit the use of natural gas and only mandated certain levels of GHG reduction”[11] has no bearing on the determination of whether a project is needed. To the extent to which Tennessee Gas and Iroquois Gas reflected similar observations regarding whether a state “statute[] purport[s] to ban natural gas,” it is worth noting that the project need determinations in those proceedings were supported by one consideration only: precedent agreements for 100% of the project capacity.[12]
Aside from the Commission’s questionable needs analysis, in this order, the Commission states that “in light of [the] factual record, and the Commission’s continued consideration of issues that include whether and how to assess the significance of GHG emissions, we disagree with Riverkeeper that more was required of the Commission in this case.”[13] Indeed, nothing more was required of the Commission, but that is not because there is a pending proceeding in which my colleagues have toyed with the idea of declaring a threshold to establish the significance of GHG emissions.[14] Rather, nothing more is required of the Commission because—aside from the Commission’s flawed “eyeball” test[15]—there is no means by which the Commission can assess the significance of GHG emissions. Therefore, the Commission had no choice but to find that it “appropriately did not characterize the emissions as significant or insignificant.”[16] Doing otherwise would have required the Commission to have announced a threshold absent the requisite factual and analytical support necessary to comply with the Administrative Procedure Act’s requirement to engage in reasoned decision making and the Natural Gas Act’s requirement that the Commission’s decisions be based upon substantial evidence.
Therefore, it is no surprise that the Commission asserted in the Certificate Order that it “is not herein characterizing [the] 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.”[17] My colleagues are trying to preserve the option to employ a new version of their flawed “eyeball” test, perhaps with a new arbitrary threshold. We have no authority to establish arbitrary significance thresholds. We also have no expertise. How exactly would my colleagues propose to establish such a threshold and then support it with the substantial evidence and reasoned decision making required to survive judicial review? As the Commission recognizes in this very order, the Social Cost of Carbon is not useful in project-level analysis.[18]
Without a credible, reasoned method to determine significance, the Commission has a difficult road ahead should it continue in its pursuit of environmental policy goals. Aside from the legal risk under the Administrative Procedure Act that would attend the establishment of any unsupported, arbitrary threshold, a reading of the Supreme Court’s decision in West Virginia v. Environmental Protection Agency[19] should impress upon the Commission that caution is necessary when contemplating the regulation of subjects that have not been clearly placed within our jurisdiction by Congress. “Agencies have only those powers given to them by Congress, and ‘enabling legislation’ is generally not an ‘open book to which the agency [may] add pages and change the plot line.’”[20] Notably, the Commission received a much-needed reminder of this several months ago when the U.S. Court of Appeals for the Fifth Circuit vacated a portion of the Commission’s order that was ultra vires because the Commission acted outside its statutory authority.[21]
Because the Commission does not have “a clear delegation from [Congress]”[22] to regulate GHG emissions, the Commission’s charge under the NGA remains “encourag[ing] the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[23] In other words, the NGA’s purpose, established by Congress and articulated by the Supreme Court, is for the Commission to promote the development of natural gas infrastructure.
Moreover, Columbia Riverkeeper argues on rehearing that the Commission’s position that it cannot evaluate the significance of GHG emissions undermines its view that the proposal would not constitute a major federal action significantly affecting the quality of the human environment.[24] I disagree.[25] In fact, the Commission’s decision to not prepare an EIS was recently affirmed in a certificate proceeding where the Commission did not ascribe significance to particular GHG emissions amounts.[26]
Finally, today’s order notes Columbia Riverkeeper’s argument that “declining to determine whether GHG emissions are significant effectively excludes GHG impacts from the requisite public interest analysis under the NGA.”[27] These assertions suggest that a project’s GHG emissions are considered in making a public convenience and necessity determination. They do not.[28] How exactly can my colleagues consider a project’s GHG emissions in making a public convenience and necessity determination when there is no means to assess the significance of the impacts? And how exactly does the consideration of GHG emissions in balancing under the public convenience and necessity standard “take meaning from the purposes of the [NGA]”?[29]
For these reasons, I respectfully concur in the result.
[1] Gas Transmission Nw. LLC, 181 FERC ¶ 61,234 (2022) (GTN).
[2] See Gas Transmission Nw. LLC, 180 FERC ¶ 61,056 (2022) (Certificate Order); id. (Danly, Comm’r, concurring in the judgment).
[3] Id. (Danly, Comm’r, concurring in the judgment).
[4] 15 U.S.C. § 717f.
[5] See, e.g., Certificate Order, 180 FERC ¶ 61,056 (Danly, Comm’r, concurring in the judgment at P 1); id. (Danly, Comm’r, concurring in the judgment at P 2) (discussing the breadth of the public convenience and necessity standard under the NGA); id. (Danly, Comm’r, concurring in the judgment at P 3) (stating that the Commission should repudiate the eye-ball test established in Northern Natural Gas Co., 174 FERC ¶ 61,189 (2021) (Northern)); id. (Danly, Comm’r, concurring in the judgment at P 3) (explaining that 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 greenhouse gas (GHG) emissions); id. (Danly, Comm’r, concurring in the judgment at P 6) (explaining that nothing can be gleaned from the Social Cost of GHGs calculation and that the Commission has provided extensive discussion on why the use of the Social Cost of Carbon, or a similar tool is not appropriate in project-level National Environmental Policy Act (NEPA) review).
[6] Columbia Riverkeeper Rehearing Request at 6-7.
[7] Certificate Order, 180 FERC ¶ 61,056 at P 27.
[8] GTN, 181 FERC ¶ 61,234 at P 15.
[9] See 15 U.S.C. § 717f.
[10] 15 U.S.C. § 717(b); see also Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 293 (1988) (“The NGA confers upon FERC [exclusive jurisdiction] over the transportation and sale of natural gas in interstate commerce for resale.”) (citation omitted).
[11] GTN, 181 FERC ¶ 61,234 at P 15.
[12] See Tenn. Gas Pipeline Co., L.L.C., 181 FERC ¶ 61,051, at P 16 (2022) (Tennessee Gas); Iroquois Gas Transmission Sys., L.P., 178 FERC ¶ 61,200, at P 15 (2022) (Iroquois Gas).
[13] GTN, 181 FERC ¶ 61,234 at P 31 (citing Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Reviews, 178 FERC ¶ 61,108 (2022) (Interim GHG Policy Statement), changed to draft status, Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,197, at P 2 (2022) (Order on Draft Policy Statements).
[14] Indeed, the Commission already attempted this in the Interim GHG Policy Statement (Docket No. PL21-3-000) prior to the policy statement being converted to a draft. See Interim GHG Policy Statement, 178 FERC ¶ 61,108.
[15] 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.’”).
[16] GTN, 181 FERC ¶ 61,234 at P 35. I pause to note that my colleagues can point to no court decision finding that the Commission should have determined the significance of the GHG emissions or that the Commission should have prepared an Environmental Impact Statement (EIS) due to its inability to determine the significance of GHG emissions. No such judicial decision exists. We therefore have no such obligation. Nor has there ever been a remand or vacatur of a certificate order on that basis.
[17] Certificate Order, 180 FERC ¶ 61,056 at P 59 (footnote omitted).
[18] See GTN, 181 FERC ¶ 61,234 at P 35 (“there are currently no criteria to identify what monetized values are significant for NEPA purposes, and we are currently unable to identify any such appropriate criteria.”); id. P 35 n.101 (“As we explained in the Certificate Order, the Commission ‘has not determined which, if any, modifications are needed to render [the Social Cost of GHGs] tool useful for project-level analyses.’”) (quoting Certificate Order, 180 FERC ¶ 61,056 at P 62 n.106).
[19] West Virginia v. EPA, 142 S. Ct. 2587 (2022).
[20] Id. at 2609 (citation omitted).
[21] See Midship Pipeline Co., L.L.C. v. FERC, 45 F.4th 867, 877 (5th Cir. 2022) (vacating part of the Commission’s order and remanding the remainder because “[t]he FERC’s interpretation of the NGA to give the agency power to determine ‘the reasonable cost’ of remediation efforts ‘change[d] the plot line’ of its enabling legislation, and was therefore erroneous” and “[t]he FERC lacks such authority under the NGA, and it likewise lacked authority to order an ALJ to make such a determination indirectly”) (quoting West Virginia v. EPA, 142 S. Ct. at 2609).
[22] West Virginia v. EPA, 142S. Ct. at 2616.
[23] NAACP v. FPC, 425 U.S. 662, 669-70 (1976) (citation omitted) (NAACP); accord Myersville Citizens for a Rural Cmty., Inc. v. FERC, 783 F.3d 1301, 1307 (D.C. Cir. 2015) (quoting NAACP, 425 U.S. at 669-70).
[24] Columbia Riverkeeper Rehearing Request at 24.
[25] See supra note 18.
[26] See Del. Riverkeeper Network v. FERC, 45 F.4th 104, 113 (D.C. Cir. 2022) (“The Commission gave reasoned responses to petitioners’ objections that adequately justified its decision not to prepare an Environmental Impact Statement.”); see also Adelphia Gateway, LLC, 171 FERC ¶ 61,049, at P 97 (2020) (“Without adequate support or a reasoned target, the Commission cannot ascribe significance to particular GHG emissions amounts.”); id. P 33 (explaining that the fact that the Commission is unable ascribe significance to particular GHG emissions amounts does not mean that the Commission must prepare of an EIS and that “[i]f Commission were to prepare an EIS, the EIS would reiterate the discussion of GHG emissions and climate change set forth in the [Environmental Assessment]”).
[27] GTN, 181 FERC ¶ 61,234 at P 40.
[28] Certificate Order, 180 FERC ¶ 61,056 (Danly, Comm’r, concurring in the judgment at P 2) (explaining that the Commission’s balancing under the public convenience and necessity standard must “take meaning” from the purpose of the NGA, i.e., “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices”) (quoting NAACP, 425 U.S. at 669-70).
[29] NAACP, 425 U.S. at 669.