Commissioner James Danly Statement
July 29, 2022
Docket No. CP14-517-001
I join the Commission’s decision to grant an amendment to Golden Pass LNG Terminal LLC’s (Golden Pass) Natural Gas Act (NGA) section 3[1] authorizations. This approval allows Golden Pass to increase construction traffic volume and work week/hour limits beyond that which was authorized in the 2016 Authorization Order[2] and allows for continuous construction work 24 hours a day, seven days a week in order to help Golden Pass timely complete construction of the Golden Pass Export Terminal (GPX Terminal). The order is not perfect,[3] but I have written on the legal flaws it contains in past statements.[4] Today, I am going to focus on the fourteen months the Commission has taken to approve Golden Pass’s request.
Golden Pass filed its request to increase its working hours and use of satellite parking facilities on February 25, 2021.[5] It amended that request on May 19, 2021.[6] At the behest of Commission staff, Golden Pass supplemented its application on June 8, 2021.[7] At that point, the application was complete. Golden Pass initially styled its submission as a request for a variance, and for the first six months following the submission of its amended variance request, it was processed as such. But eventually it became clear to Commission staff that what Golden Pass was actually seeking was an amendment to their section 3 authorization and came to construe it as such, necessitating a lengthier review. On November 3, 2021, Commission staff issued a notice for Golden Pass’s application.[8]
On March 22, 2022, Commission staff issued the Environmental Assessment (EA) a month later than staff’s anticipated issuance date.[9] Golden Pass had asked the Commission to act on its request no later than July 1, 2021 for what Golden Pass admittedly styled as a variance request.[10]
The time for processing Golden Pass’s submission was critical. As Golden Pass initially explained, it filed its initial variance request because, “without [the proposed] changes the Project will not be able to meet its schedule, significantly prolonging construction at the GPX Terminal site”[11] and “successful execution of the Project would not be feasible.”[12] Despite the urgency of Golden Pass’s request, fourteen months have elapsed between its amended submission in May 2021 and today’s issuance.
Fourteen months is too long a time to spend processing an urgently needed request for a project that the Commission has already approved as in the public interest. This is especially true given that this is not a complicated case. As the Commission describes it, Golden Pass’s submission boils down to “a request to increase construction traffic volume and work week/hour limits” in order to enable it to conduct “continuous construction work 24 hours a day, seven days a week.”[13] For context, the average length of time required to process a section 7[14] pipeline application is twelve months, and many of those are far more complicated than the request at issue here.[15]
There are a number of other outstanding NGA submissions that we have yet to act upon. For example, Port Arthur LNG Phase II, LLC’s (Port Arthur) application to add two liquefaction trains to its authorized liquefied natural gas (LNG) export terminal has been pending with the Commission since February 19, 2020, over 29 months.[16] Commission staff issued the EA for Port Arthur’s project in January of 2021.[17] Yet, over a year later in February of 2022, staff invited the U.S. Environmental Protection Agency to participate as a cooperating agency in the environmental review process.[18] Review is still ongoing, with Commission staff having requested supplemental information in letters issued in June and July of 2022.[19]
We have also seen long processing times in petitions for declaratory orders regarding contemplated LNG facilities. These declaratory orders seek Commission declarations that potential LNG facilities would not be subject to Commission-jurisdiction under the NGA. They are essential to establish the regulatory certainty required to obtain financing on commercially viable terms. One such example is the declaratory order issued for Nopetro LNG, LLC (Nopetro),[20] the order on rehearing for which issued contemporaneously with this order.[21] In that case, Nopetro filed its petition for a declaratory order on April 20, 2021, requesting “Commission act[ion] . . . no later than July 30, 2021.”[22] We did not act on the petition until March 25, 2022, eight months after the requested action date.[23]
Again, the project sponsor explained its need for prompt action and explained the harm that delay would cause. Nopetro stated that the declaration was required by July 30, 2021 in order “to allow Nopetro to reach a final investment decision, secure financing for construction and meet requests for the Project to begin the process of securing necessary permits and/or commence construction activities in late 2021 or the first quarter of 2022.”[24] When eventually the Commission did act on Nopetro’s petition, it only did so after Nopetro’s request that the Commission “act as soon as possible.”[25] That letter came nearly a year after the petition was originally filed and nearly eight months after the date for action requested in its petition. In that letter, Nopetro laid out the implications of the Commission’s delay, which included “the loss of opportunities to reach customers in Central and South America and the Caribbean who lack reliable access to clean-burning natural gas” and the inability “to secure contracts to serve these customers absent the confidence necessary to mobilize its clean solution for diesel displacement.”[26] Nopetro also explained that “[f]urther delay . . . would continue to leave Nopetro mired in an uncertain legal environment,” impose significant costs, and, potentially, “cause the Project to be abandoned.”[27]
In another declaratory order proceeding, 678 days have passed without Commission action.[28] Bradford County Real Estate Partners LLC (Bradford) filed a petition for a declaratory order on September 18, 2020. The petition is not particularly complicated. Bradford seeks a determination as to whether the Commission has jurisdiction over the construction and operation of a natural gas liquefaction and truck and rail loading facility.[29] The Commission has more than sufficient resources to act on such requests in a timely manner.
Bradford, for its part, has also explained the importance of prompt action. In its petition, Bradford requested expedited action and asked that the Commission act “no later than November 15, 2020” in order to “provid[e] regulatory certainty [for Bradford] to proceed with operations on a timely basis” as Bradford had “intend[ed] to seek financing for the Facility during October 2020 and begin construction shortly thereafter.”[30] The Commission has still not acted even though Bradford submitted a letter on February 3, 2022 “reiterat[ing] its request that the Commission issue an order in a timely manner.”[31]
The costs associated with these delays are profound.[32] Delay in processing submissions results in greater project expenses and difficulty securing capital on acceptable terms. The climate of uncertainty such delays create threatens the entire LNG industry. Uncertainty around timelines increases risk premiums and makes it harder to rationally allocate capital in this capital-intensive industry. This further chills investment and impairs an industry the Commission is charged with promoting.[33] We have already seen proposed section 7 projects[34] which, if approved, could have delivered critical, desperately-needed natural gas cancelled due to Commission inaction.[35]
In addition to being able to mitigate severe natural gas supply constraints at home, LNG facilities have become geostrategic assets and their development and operation matter more to the United States’ strategic interests and the well-being of its allies than ever before. Put simply, “LNG . . . is needed right now.”[36] In the face of this desperate need, the Commission has taken fourteen months to process Golden Pass’s request, a request for longer construction hours and more parking.
For these reasons, I respectfully concur in the judgment.
[1] 15 U.S.C. § 717b.
[2] Golden Pass Prods. LLC, 157 FERC ¶ 61,222 (2016) (2016 Authorization Order).
[3] For example, while I understand the motives animating its inclusion, I question the specificity of the condition related to shuttle bus idling and passenger loading/unloading in one of the parking lots and commend every reader’s attention to Commissioner Christie’s separate statement on the matter.
[4] See, e.g., ANR Pipeline Co., 179 FERC ¶ 61,040 (2022) (Danly, Comm’r, concurring in the judgment at P 6) (discussing breadth of the public interest standard under the NGA); ANR Pipeline Co., 179 FERC ¶ 61,122 (2022) (Danly, Comm’r, concurring in the judgment at PP 3-4) (stating that the Commission should repudiate the Northern Natural eye-ball test); id. (Danly, Comm’r, concurring in the judgment at PP 5-6) (explaining concern regarding calculation of the Social Cost of Carbon).
[5] See Golden Pass, Variance Request No. 15 (Feb. 25, 2021).
[6] See Golden Pass, Revised Variance Request No. 15 (May 19, 2021).
[7] See Golden Pass, Response to Commission Staff June 3, 2021 Letter Requesting Additional Information (June 8, 2021).
[8] See Commission Staff, Notice of Amendment of Authorizations and Establishing Intervention Deadline, at 1 (Nov. 3, 2021) (“If authorized, Variance No. 15 which would modify their original authorizations to such an extent that it is appropriate to treat these plans as amendments to the Section 3 approvals for [sic] issued for the projects.”).
[9] Commission Staff, Environmental Assessment (Mar. 22, 2022). Commission staff had expected to issue an EA on February 7, 2022. See Commission Staff, Notice of Schedule for the Preparation of an Environmental Assessment, at 1 (Dec. 21, 2021).
[10] See Golden Pass, Revised Variance Request No. 15, at 1. In fact, in its original February 2021 submission, Golden Pass requested action no later than March 24, 2021, but changed that date in its revised variance request in May 2021. See Golden Pass, Variance Request No. 15, at 1 (Initial Request).
[11] Initial Request at 3.
[12] Id. at 5.
[13] Golden Pass LNG Terminal LLC, 180 FERC ¶ 61,058, at P 2 (2022).
[14] 15 U.S.C. § 717f.
[15] Commissioner Danly, Letter Responding to Senator Barrasso, Docket Nos. CP20-27, et al., at 7 (Nov. 29, 2021). I note that the instant authorization is pursuant to NGA section 3.
[16] Port Arthur, Application, Docket No. CP20-55-000 (Feb. 19, 2020).
[17] Port Arthur, Environmental Assessment, Docket No. CP20-55-000 (Jan. 15, 2021).
[18] Commission Staff, Letter Requesting U.S. Environmental Protection Agency to Participate as a Cooperating Agency for NEPA, Docket No. CP20-55-000 (Feb. 3, 2022).
[19] See Commission Staff, Letter Requesting Additional Information, Docket No. CP20-55-000 (July 12, 2022); Commission Staff, Letter Requesting Additional Information, Docket No. CP20-55-000 (June 21, 2022).
[20] Nopetro LNG, LLC, 178 FERC ¶ 61,168 (2022) (Declaratory Order).
[21] Nopetro LNG, LLC, 180 FERC ¶ 61,057 (2022).
[22] Nopetro, Petition for Declaratory Order, Docket No. CP21-179-000, at 2 (Apr. 20, 2021).
[23] See Declaratory Order, 178 FERC ¶ 61,168.
[24] Nopetro, Petition for Declaratory Order, Docket No. CP21-179-000, at 2 (footnote omitted).
[25] Nopetro, Request for Commission Action, Docket No. CP21-179-000, at 2 (Mar. 21, 2022).
[26] Id. at 1.
[27] Id. at 2.
[28] Bradford County Real Estate Partners LLC, Petition for Declaratory Order Disclaiming Jurisdiction and Motion for Expedited Action, Docket No. CP20-524-000 (Sept. 18, 2020). I acknowledge that I was Chairman for 77 of those days. In yet another proceeding, Delaware River Partners, LLC has experienced similar delays regarding its Petition for Declaratory Order filed on September 11, 2020 in Docket No. CP20-522-000. In that proceeding, Delaware River Partners, LLC requested “that the Commission act on [its] Petition . . . on an expedited basis but no later than October 30, 2020.” Delaware River Partners LLC, Petition for Declaratory Order Disclaiming Jurisdiction and Motion for Expedited Action, Docket No. CP20-522-000, at 22 (Sept. 11, 2020).
[29] Bradford, Petition for Declaratory Order Disclaiming Jurisdiction and Motion for Expedited Action, Docket No. CP20-524-000, at 1; see also 15 U.S.C. §§ 717b, 717f.
[30] Bradford, Petition for Declaratory Order Disclaiming Jurisdiction and Motion for Expedited Action, Docket No. CP20-524-000, at 13.
[31] Bradford, Letter Providing Supplemental Information, Docket No. CP20-524-000, at 2 (Feb. 3, 2022).
[32] See, e.g., Nat’l Grid LNG, LLC, 179 FERC ¶ 61,205, at PP 5-7 (2022) (explaining that although National Grid LNG, LLC “planned to begin construction of the project at the end of 2016[,] . . . it did not receive certificate authorization until October 2018,” and therefore it requested an increase in its initial recourse rates since the estimated cost of the facilities increased from $180,256,679 to $390,829,000—a difference of $210,572,321—as a result of increased construction costs due to the timing change and construction work plan changes). Cf. Duke Energy, Dominion Energy and Duke Energy cancel the Atlantic Coast Pipeline (July 5, 2020), https://news.duke-energy.com/releases/dominion-energy-and-duke-energy-cancel-the-atlantic-coast-pipeline (announcing Dominion Energy’s and Duke Energy’s cancellation of the Atlantic Coast Pipeline Project—a project with a Commission-issued certificate of public convenience and necessity—due to “ongoing delays and increasing cost uncertainty which threaten[ed] the economic viability of the project” and explaining that the project faced many challenges, including: (1) adverse court decisions regarding their federal permit for waterbody and wetland crossings (Nationwide Permit 12), which led to uncertainty in the companies’ investment; and (2) “legal challenges to the project’s federal and state permits[,] . . . [which] caused significant project cost increases and timing delays” and resulted in an estimated “project cost . . . increase[] to $8 billion from the original estimate of $4.5 to $5.0 billion” as well as an estimated delay of “three-and- a-half-year[s]” for the project’s in-service date).
[33] See NAACP v. FPC, 425 U.S. 662, 669-70 (1976) (recognizing that the purpose of the NGA is to “encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices”) (citations omitted).
[34] 15 U.S.C. § 717f.
[35] See, e.g., Adelphia Gateway, LLC, Withdrawal of Prior Notice, Docket No. CP21-14-000, at 2 (Oct. 12, 2021) (withdrawing a request to install and operate an additional electric-motor driven compressor unit at its already authorized Marcus Hook Compressor Unit because “as a result of the extension of the environmental review through the supplemental EIS process and a prolonged Commission review process, the Project has been delayed well beyond Adelphia’s expectations and, more specifically, there is significant uncertainty regarding when an order will issue in this docket” and “[i]n light of this, Adelphia has decided not to continue the development of the Project”); Eastern Gas Transmission & Storage, Letter Withdrawing its Applications for the Mid-Atlantic Cooler Project, Docket No. CP21-97-000, at 1 (Sept. 20, 2021) (withdrawing an application for an NGA section 7 certificate—which had been filed nearly six months prior and had requested permission to build minor upgrades to three compressor stations in Pennsylvania and Virginia—because, “despite [the project’s] limited scope, the Commission has not taken action to prepare an Environmental Assessment”); Dominion Energy Transmission Inc., Withdrawal of Certificate Application for Sweden Valley Project, Docket No. CP18-45-000 (June 28, 2019) (withdrawing an application for a project that “involved limited facilities, including modification of an existing compressor station and the construction of two measuring stations, approximately five miles of pipeline and related ancillary facilities” because “the Project has been adversely impacted” and “[t]he Project customer has opted to terminate the requested transportation service” as a result of the Commission’s inaction on the application nearly ten months after the issuance of an environmental assessment).
[36] See 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 01:02:24 (Mar. 3, 2022) (recording Chairman Manchin). See also FERC Staff Report to the Commission, Summer Energy Market and Reliability Assessment, at 6 (May 19, 2022), https://www.ferc.gov/media/report-summer-assessment-2022 (“Higher natural gas prices for summer 2022 are expected at major trading hubs across the U.S. as demand growth is forecasted to exceed supply growth amid increases in LNG liquefaction capacity, increase exports due to global demand for LNG, and limited growth in natural gas production.”); id. at 7 (“The surrounding Gulf Coast region should see a combination of strong industrial sector and electric power sector demand this summer in addition to record LNG export demand.”); id. at 8 (“Natural gas production from the nearby Appalachia region is typically more than able to meet summer demand in the Northeast and New England, resulting in slightly reduced natural gas prices as compared to the Texas and Louisiana Gulf Coasts (South Texas to Henry Hub), which have significant year-round demand for electric power generation, industrial processes, and LNG exports.”); id. at 9-10 (“International LNG prices continue to remain relatively high in 2022 amid supply uncertainties and the need to replenish Europe’s natural gas inventories, which combined with increased liquefaction capacity in the U.S. is expected to drive higher LNG exports from the U.S.”) (citing Energy Information Administration, Short-Term Energy Outlook Market Review - Natural Gas (Apr. 7, 2022), https://www.eia.gov/outlooks/steo/marketreview/natgas.php); id. at 11 (“[H]igh European natural gas prices have recently incentivized more LNG exports to the continent, with shipments to Europe outpacing exports to Asia beginning in December 2021. Continued increased international demand should incentivize high utilization rates of and exports from U.S. LNG export terminals throughout summer 2022.”) (citation omitted); id. at 41 (“Natural gas exports are forecast to contribute to natural gas demand growth, as LNG exports continue to increase.”); id. (“U.S. energy sector participants may continue to expand production and export supplies needed globally, such as LNG.”).