Commissioner James Danly Statement
March 25, 2022
Docket No. CP20-48-000
I concur with the decision to grant the Natural Gas Act (NGA) section 7(c)[1] authorization requested by Iroquois Gas Transmission System, L.P. (Iroquois).[2] I write separately to express four points. As an initial matter, I note that 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.
First, I disagree with the Commission’s determination that “emissions from the downstream combustion of the gas transported by the project are reasonably foreseeable emissions.”[6] The facts here, like in Food & Water Watch v. FERC,[7] 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.”[8] 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.”[9] I am not convinced that the LDCs involved here and the discrete, known generators at issue in Sierra Club v. FERC (Sabal Trail)[10] 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, Sabal Trail, which Food & Water Watch applies, is inconsistent with the Supreme Court’s holding in Department of Transportation v. Public Citizen.[11] My views are not idiosyncratic. Both the dissenting opinion in Sabal Trail and the Court of Appeals for the Eleventh Circuit agree.[12]
Second, I write to state that, while not fatal to this order’s durability, I would have explicitly repudiated Northern Natural Gas Company[13] 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.”[14] 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.[15] The Council on Environmental Quality (CEQ) has found similarly.[16] And the Commission’s now-draft Interim GHG Policy Statement[17] does not alter these determinations.[18]
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.[19] 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[20]—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.[21]
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?[22] I suppose, given this certificate order, 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.[23] Nor will the Commission calculate the Social Cost of Carbon from project emissions in those circumstances.[24] 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.
Third, I write separately to express that I am sympathetic to Iroquois’ request to recover Administrative and General (A&G) costs it states it will incur from providing the incremental service.[25] The Natural Gas Act requires the Commission to provide Iroquois a reasonable opportunity to recover project costs and earn a fair return on investment.[26] However, I agree that Iroquois has not met its burden to show that it will actually incur the costs from providing the incremental service.[27] In my view, Iroquois must show how calculating A&G costs using a percentage derived from dividing existing A&G costs by total gross plant is a reasonable methodology for determining the actual costs incurred from constructing and operating the Enhancement by Compression Project.[28]
Fourth, it has been over two years since Iroquois filed its application;[29] nearly 18 months since the Commission issued an Environmental Assessment (EA) for the project;[30] and nearly 15 months after the requested action date that Iroquois stated was necessary to ensure it had sufficient time to complete final engineering, long lead-time materials procurement, and construction of facilities.[31] Iroquois and its customers have filed multiple requests for the Commission’s prompt action.[32]
One cannot help but wonder about the purpose for the Commission’s delay. There was no need for the Commission to issue supplemental draft and final Environmental Impact Statements (EISs).[33] The D.C. Circuit has not stated that an EA is inadequate for the consideration of projects’ GHG emissions.[34] The Commission could have quantified direct and downstream emissions and placed those emissions into context in an order.
And 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 yet those policy statements are now in draft form,[37] they are no longer in effect, but here we are acting on certificate orders.
For these reasons, I respectfully concur in the judgment.
[1] 15 U.S.C. § 717f(c).
[2] See Iroquois Gas Transmission Sys., L.P., 178 FERC ¶ 61,200 (2022) (Iroquois).
[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] Iroquois, 178 FERC ¶ 61,200 at P 49.
[7] Food & Water Watch v. FERC, No. 20-1132, --- F.4th ---, 2022 WL 727037 (D.C. Cir. Mar. 11, 2022).
[8] Id. at *7.
[9] Id. at *7, 8 (emphasis added).
[10] 867 F.3d 1357 (D.C. Cir. 2017).
[11] 541 U.S. 752 (2004) (Public Citizen).
[12] See 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’s, 941 F.3d 1288, 1299-1300 (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.”).
[13] N. Nat. Gas Co., 174 FERC ¶ 61,189, at PP 29-36 (2021) (Danly, Comm’r, concurring in part and dissenting in part) (Northern).
[14] Dominion Transmission, Inc., 163 FERC ¶ 61,128, at P 67 (2018) (citation omitted).
[15] See, e.g., Nat. Fuel Gas Supply Corp., 158 FERC ¶ 61,145, at P 188 (2017).
[16] 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.”).
[17] See Order on Draft Policy Statements, 178 FERC ¶ 61,197.
[18] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 (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).
[19] See, e.g., Mountain Valley Pipeline, LLC, 163 FERC ¶ 61,197, at P 292 (2018).
[20] Interim GHG Policy Statement, 178 FERC ¶ 61,108 at P 19.
[21] Id. (Danly, Comm’r, dissenting at PP 33-34).
[22] See Northern, 174 FERC ¶ 61,189 (Danly, Comm’r, concurring in part and dissenting in part at PP 15-16); id. 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”).
[23] Iroquois, 178 FERC ¶ 61,200 at P 56.
[24] Id. P 59.
[25] See Iroquois Gas Transmission Sys., L.P., Response to Data Request dated Sept. 14, 2020, Docket No. CP20-48-000, at 1 of 3 (Sept. 21, 2020).
[26] See FPC v. Hope Nat. Gas Co., 320 U.S. 591, 603 (1944).
[27] Iroquois, 178 FERC ¶ 61,200 at PP 24-25.
[28] See Iroquois Gas Transmission Sys., L.P., Response to Data Request dated Sept. 14, 2020, Docket No. CP20-48-000, at 2 of 3 (Sept. 21, 2020).
[29] See Iroquois Gas Transmission Sys., L.P., Abbreviated Application for a Certificate of Public Convenience and Necessity, Docket No. CP20-48-000 (Feb. 3, 2020) (Application).
[30] Commission Staff, Environmental Assessment for the Enhancement by Compression Project, Docket No. CP20-48-000 (Sept. 30, 2020).
[31] See Application at 1 (listing December 31, 2020 as the requested action by date).
[32] See, e.g., Consolidated Edison of New York, Inc. (Con Edison), Motion for Leave to Answer and Limited Answer, Docket No. CP20-48-000, at 2 (Jan. 28, 2022) (“[T]he Commission should not further delay its decision and should promptly approve the ExC Project.”); National Grid Gas Delivery Companies (National Grid), Comments, Docket No. CP20-48-000, at 1 (Dec. 17, 2021) (National Grid “urge[s] the Commission to act expeditiously to approve Iroquois Gas Transmission System, L.P.’s certificate application for the ExC Project.”); Con Edison, Comments, Docket No. CP20-48-000, at 2 (Apr. 20, 2021) (“Therefore, Con Edison again respectfully requests that the Commission take prompt action approving the ExC Project.”); National Grid, Supplemental Comments Docket No. CP20-48-000, at 2 (Ap. 9, 2021) (“A prompt decision from the Commission in the instant proceeding is appropriate.”); Iroquois Gas Transmission Sys., L.P., Request for Prompt Issuance of Certificate of Public Convenience and Necessity, Docket No. CP20-48-000, at 1 (Jan. 26, 2021) (“Iroquois respectfully that the Commission act promptly and issue the certificate for the ExC Project – if possible, by notational vote.”).
[33] See Commission Staff, Draft Environmental Impact Statement for the Enhancement by Compression Project, Docket No. CP20-48-000 (Jun. 11, 2021); Commission Staff, Final Environmental Impact Statement for the Enhancement by Compression Project, Docket No. CP20-48-000 (Nov. 12, 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. 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] 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.”) (citations omitted).