Commissioner James Danly Statement
May 19, 2022
Docket No. CP21-6-000
I concur in part in today’s order granting the requested Natural Gas Act (NGA) section 7 authorizations.[1] I dissent in part from the Commission’s decision to stay the certificate. I write separately to make a handful of points.
First, the Commission stays the certificate’s effectiveness[2] pursuant to the policy established in Order No. 871-B, which provides that NGA section 7(c) certificates of public convenience and necessity will be presumptively stayed during the 30-day rehearing period and pending Commission resolution of any timely requests for rehearing filed by landowners, up until 90 days following the date that a qualifying request for rehearing may be deemed denied by operation of law.[3] For the same reasons as those stated in my prior dissents to Order No. 871-B[4] and Order No. 871-C[5] and my separate statement in the recently issued Northern Natural Gas Company case,[6] I dissent in part from this order. I restate my view that the Commission has no authority to presumptively stay section 7 certificate orders for the purpose of preventing the certificate holder from exercising eminent domain.[7] The Commission has previously recognized that “[c]ourts have repeatedly held that Congress did not give the Commission authority to deny or restrict a certificate-holder’s exercise of the statutory right of eminent domain with respect to a certificate issued pursuant to the procedures laid out in section 7(e).”[8] And yet it is evident that the Commission’s intent is to stay the effectiveness of the certificate for that very purpose.[9] This decision also appears to be in tension with several provisions of the NGA.[10] Having made the affirmative finding that the project is in the public convenience and necessity, the Commission has no authority to, at the very same time, stay that decision solely because a landowner has filed a protest.
I am pleased to see that this order issued only two months after the issuance of the final Environmental Impact Statement (EIS). This stands as a marked improvement over our recent performance, and, in fairness, I should acknowledge that this order issued a couple of months before my predicted date of issuance.[11] Despite our relative quickness following the issuance of the final EIS, in comparison to Commission action on other certificate authorizations,[12] it is worth bearing in mind that this project is still being unnecessarily delayed. Commission staff (who work at the Chairman’s direction) chose to prepare an EIS when a much shorter EA would have been sufficient, adding months to the process. The majority’s decision to now stay the certificate could very possibly result in a delay that is “harmful” to the proposed project due to the need to “contend with especially short construction seasons” because “Wyoming’s winters are severe and the ground freezes early.”[13]
Second, as I have explained in recently-issued certificate orders,[14] while not fatal to the durability of the order, I would have explicitly repudiated the 2021 Northern Natural Gas Company decision[15] 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.”[16] 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.[17] The Council on Environmental Quality (CEQ) has found similarly.[18] Moreover, there is no standard by which the Commission could, consistent with its obligations under the law, ascribe significance to a particular rate or volume of GHG emissions.[19] And the Commission’s recent attempts to do so, absent the expertise to make such a determination, have amounted to little more than picking arbitrary numbers.[20]
By now stating in our 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,”[21] 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.[22] Perhaps higher.[23] 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[24] nor can it be considered reasoned decision making.[25]
I pause to note that this proceeding reflects the Commission’s earlier attempt, in the now-draft Interim GHG Policy Statement,[26] to establish a significance threshold. In this order, the Commission “acknowledge[s] that . . . Commission staff assessed the significance of GHGs for the project in the final EIS by applying the Commission’s February 17, 2022 Interim [GHG] Policy Statement,”[27] but the Commission declines to reaffirm that determination regarding significance “because the Commission is considering approaches for assessing significance in a pending proceeding.”[28] I agree with that decision and am pleased that my colleagues appear to have reconsidered their position that the Commission needed to establish a threshold for determining what level of project-induced greenhouse gas emissions is significant as a precondition to action on pending certificate applications.[29] And I remain hopeful that my colleagues may yet reconsider their attempt to regulate a matter over which we have no authority.[30]
Third, regarding the inclusion of a calculation of the Social Cost of Carbon from the project’s emissions,[31] 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.[32] Nothing can be gleaned from the numbers calculated by Commission staff and included 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.[33]
I also observe that the Environmental Protection Agency (EPA) “recommend[s] that the Commission incorporate mitigation measures into the terms and conditions to reduce any potential GHG emissions attributable to the project, including methane reduction activities to reduce emissions through several technologies” and also “that Spire Storage adopt work practice standards and technologies as part of its normal operating procedures for its project facilities as are reasonably feasible in an effort to mitigate GHG emissions.”[34] In response, the Commission states that “Spire Storage conducts a leak detection and repair program consistent with EPA Method 21.”[35] Why does the Commission offer such information? Could it be attempting to weigh mitigation measures in its public convenience and necessity test?
Fourth, I would like to take a moment to address Engineering Condition A, which states that “Spire Storage shall operate the Clear Creek Storage Field in such a manner as to prevent/minimize gas loss or migration.”[36] I recognize that the Commission has included this condition in prior orders, including orders for which I have voted.[37] Upon further consideration, however, this condition and the manner in which the Commission could evaluate whether the condition has been satisfied are unclear to me. For that reason, I do not support the inclusion of the condition as currently formulated. I recognize that it may be designed to assist us to compel the proper operation of storage facilities. But it is unclear how exactly the Commission could, as a practical matter, compel proper operation pursuant to a condition that is this vague. As the Commission acknowledges, “Spire Storage is subject to the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) underground natural gas facility regulations, which require storage companies to file integrity monitoring program plans, and the provisions of American Petroleum Institute Recommended Practice 1171, codified in PHMSA’s regulations, which details recommended practices for depleted reservoirs.”[38] Therefore, I question whether it is properly within the Commission’s power (or for that matter, expertise) to determine whether the facilities are “operate[d] . . . in such a manner as to prevent/minimize gas loss or migration.”[39] Or is this yet another example of where the Commission has trodden into another agency’s domain?[40]
Finally, the natural gas industry has seen tremendous uncertainty due to several recent Commission actions: its establishment of the “eyeball test,”[41] its reopening of a final non-appealable certificate order,[42] the preparation of EISs where Environmental Assessments had long sufficed, and the establishment of a significance threshold in the Interim GHG Policy Statement,[43] which has since wisely been converted to a draft policy statement. I fear that there is yet more uncertainty to come with CEQ’s new NEPA regulations taking effect tomorrow, May 20, 2022.[44] Although it is not yet clear how the Commission will apply the new regulations to currently pending projects where environmental documents have already been prepared, should the Commission decide to prepare supplemental environmental documents, or receive guidance from CEQ to do so, project sponsors will likely experience even more delay.
For these reasons, I respectfully concur in part and dissent in part.
[1] 15 U.S.C. § 717f.
[2] Spire Storage W. LLC, 179 FERC ¶ 61,123, at P 70 (2022).
[3] See Limiting Authorizations to Proceed with Constr. Activities Pending Rehearing, 175 FERC ¶ 61,098, at P 46 (2021) (Order No. 871-B), order on reh’g & clarification, 176 FERC ¶ 61,062 (2021) (Order No. 871-C).
[4] See Order No. 871-B, 175 FERC ¶ 61,098 (Danly, Comm’r, dissenting).
[5] See Order No. 871-C, 176 FERC ¶ 61,062 (Danly, Comm’r, dissenting).
[6] 178 FERC ¶ 61,203 (2022) (Danly, Comm’r, concurring in part and dissenting in part).
[7] See Order No. 871-B, 175 FERC ¶ 61,098 (Danly, Comm’r, dissenting at P 7).
[8] Spire STL Pipeline LLC, 178 FERC ¶ 61,109, at P 9 (2022) (citing Midcoast Interstate Transmission, Inc. v. FERC, 198 F.3d 960, 973 (D.C. Cir. 2000) (“The Commission does not have the discretion to deny a certificate holder the power of eminent domain.” (internal citation omitted)); Twp. of Bordentown, N.J. v. FERC, 903 F.3d 234, 265 (3d Cir. 2018) (stating that NGA section 7(h) “contains no condition precedent” to the right of eminent domain, other than issuance of the certificate, when a certificate holder is unable to acquire a right-of-way by contract); Berkley v. Mountain Valley Pipeline, LLC, 896 F.3d 624, 628 (4th Cir. 2018) (“Issuing such a Certificate conveys and automatically transfers the power of eminent domain to the Certificate holder . . . . Thus, FERC does not have discretion to withhold eminent domain power once it grants a Certificate.” (internal citation omitted))).
[9] See Spire Storage W. LLC, 179 FERC ¶ 61,123 at P 70 (“Because Shaun Sims, on behalf of Sims Sheep Company LLC, an affected landowner, intervened and protested, and Spire has not acquired the necessary property interests, we will stay the certificate during the 30-day rehearing period and pending Commission resolution of any timely requests for rehearing filed by the landowner, up until 90 days following the date that a request for rehearing may be deemed to have been denied under NGA section 19(a).”); id. P 71 (“Indeed, in the absence of the presumptive stay of the certificate contemplated under Order No. 871-B, the project sponsor may initiate eminent domain proceedings—‘among the most significant actions that a government may take with regard to an individual’s private property’—and may do so without awaiting completion of proceedings at the Commission.”) (footnote omitted).
[10] See N. Nat. Gas Co., 178 FERC ¶ 61,203 (Danly, Comm’r, concurring in part and dissenting in part at PP 4-7).
[11] See Commissioner Danly March 23, 2022 Letter in Response to Representatives McMorris Rodgers and Upton March 2, 2022 Letter, Docket No. PL18-1-000, at App. A (estimating an order date of July 15, 2022).
[12] See, e.g., North Baja Pipeline, LLC, 179 FERC ¶ 61,039 (2022) (Danly, Comm’r, concurring in the judgment at P 6) (“It has been more than two years since North Baja filed its application; more than a year and a half since the Commission issued an Environmental Assessment (EA) for the project; and more than a year since North Baja’s requested action date.”) (footnotes omitted); Columbia Gulf Transmission, LLC (Columbia Gulf), 178 FERC ¶ 61,198 (2022) (Danly, Comm’r, concurring in the judgment at P 9) (“It has been over 18 months since Columbia Gulf filed its application; over a year since the Commission issued an Environmental Assessment (EA) for the project; and nearly 5 months after Columbia Gulf’s requested action date.”) (footnotes omitted).
[13] Senator Barrasso April 28, 2022 Letter, Docket No. CP21-6-000, at 2; see also Senator Barrasso February 15, 2022 Letter, Docket Nos. PL18-1-000, et al., at 3 (“Administrative delays hit projects in Wyoming particularly hard. Our short construction season effectively begins in May after the spring thaw and continues only through October, when freezing weather begins to set in. Even a delay of a few weeks can lead to a much longer delay. . . . Practically speaking, if the Commission does not act . . . by May 31, 2022, the project will be at severe risk of losing an entire construction season. The result could be that Americans across the West will not have the benefits of this natural gas storage until years later than planned.”). I acknowledge that, pursuant to 18 C.F.R. § 157.23(a), “[e]ven absent the stay, no notice to proceed with construction may be issued until the 30-day rehearing window expires.” Spire Storage W. LLC, 179 FERC ¶ 61,123 at P 71 (citing 18 C.F.R. § 157.23(a)).
[14] See, e.g., Columbia Gulf, 178 FERC ¶ 61,198 (Danly, Comm’r, concurring in the judgment at PP 2-4).
[15] N. Nat. Gas Co., 174 FERC ¶ 61,189 (2021) (Northern Natural). In Northern Natural, 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] Dominion Transmission, Inc., 163 FERC ¶ 61,128, at P 67 (2018) (footnote omitted).
[17] See, e.g., Nat’l Fuel Gas Supply Corp., 158 FERC ¶ 61,145, at P 188 (2017).
[18] 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.”).
[19] See, e.g., Mountain Valley Pipeline, LLC, 163 FERC ¶ 61,197, at P 292 (2018).
[20] See Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Reviews, 178 FERC ¶ 61,108, at PP 79-81 (2022) (establishing a significance threshold of 100,000 metric tons per year of CO2e) (Interim GHG Policy Statement); id. (Danly, Comm’r, dissenting at PP 32-36) (explaining why the majority’s presumptive significance threshold is illogical); see also Northern Natural, 174 FERC ¶ 61,189 (Danly, Comm’r, concurring in part and dissenting in part at P 16) (comparing the Northern Natural test to “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”).
[21] Spire Storage W. LLC, 179 FERC ¶ 61,123 at P 52 (footnote omitted).
[22] 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.”) (footnote 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.”) (footnote omitted) (Tennessee Gas).
[23] 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.”) (citation omitted) (emphasis added); Tennessee Gas, 178 FERC ¶ 61,199 (Glick, Chairman, concurring at P 5 n.13) (same).
[24] 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)) (emphasis in Atl. City Elec. Co.); 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?”) (March 2022 Senate Hearing); see generally Interim GHG Policy Statement, 178 FERC ¶ 61,108 (Danly, Comm’r, dissenting).
[25] 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).
[26] See 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, Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,107 (2022) and Interim GHG Policy Statement, 178 FERC ¶ 61,108, to “draft” policy statements) (Order on Draft Policy Statements).
[27] Spire Storage W., 179 FERC ¶ 61,123 at P 52 n.106 (citing see Interim GHG Policy Statement, 178 FERC ¶ 61,108).
[28] Id. (citing Order on Draft Policy Statements, 178 FERC ¶ 61,197).
[29] Compare March 2022 Senate Hearing at 00:59:02 (recording the following explanation by Chairman Glick regarding why he thinks the Commission needed to establish a significance threshold: “We need to act on this issue . . . . [W]e have cases that the courts have told us that we have to analyze the impact of the greenhouse gas emissions as to whether they’re significant or not, and if we sat there and didn’t do anything, these cases would be pending, sitting there and sitting there.”), with Columbia Gulf, 178 FERC ¶ 61,198 (Glick, Chairman, concurring at P 4) (“I concur because today’s order does not rehash those same arguments on the difficulty of assessing climate impacts. Instead, it explains that the Commission is not making a determination on significance given the proposal in our now-draft policy statement to establish a rebuttable presumption that a project causing 100,000 metric tons of CO2e emissions would significantly contribute to climate change. Under the circumstances, I can support that conclusion.”) (emphasis added); see also Tennessee Gas, 178 FERC ¶ 61,199 (Glick, Chairman, concurring at P 4) (same).
[30] See Richmond Power & Light v. FERC, 574 F.2d 610, 620 (D.C. Cir. 1978) (“What the Commission is prohibited from doing directly it may not achieve by indirection.”) (citation omitted).
[31] See Spire Storage W. LLC, 179 FERC ¶ 61,123 at P 60.
[32] 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.”).
[33] 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) (footnote omitted) (emphasis added).
[34] Spire Storage W. LLC, 179 FERC ¶ 61,123 at P 58.
[35] Id.
[36] Spire Storage W. LLC, 179 FERC ¶ 61,123 at App. B, Condition (A).
[37] See, e.g., Washington 10 Storage Corp., 175 FERC ¶ 61,051, at App., Condition 1 (2021).
[38] Spire Storage W., 179 FERC ¶ 61,123 at P 46 (citations omitted).
[39] Id. at App. B, Condition (A) (emphasis added).
[40] See, e.g., Algonquin Gas Transmission, LLC, 174 FERC ¶ 61,126 (2021) (Danly, Comm’r, dissenting at P 31).
[41] See infra n.16.
[42] See Algonquin Gas Transmission, LLC, 174 FERC ¶ 61,126 (Danly, Comm’r, dissenting at P 31) (“The Commission’s long-standing practice is to rely on PHMSA to regulate pipeline safety and the EPA, or its state delegated agency, to regulate air emissions. It is baffling on what factual basis the Commission could modify the Certificate Order and what additional measures the Commission could impose that PHMSA and Massachusetts [Department of Environmental Protection] have not considered and would not interfere with their approvals.”) (citation omitted).
[43] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 at PP 79-81.
[44] See National Environmental Policy Act Implementing Regulations Revisions, 87 Fed. Reg. 23,543 (Apr. 20, 2022) (to be codified at 40 C.F.R. pts. 1502, 1507, and 1508).