Statement of Commissioner James P. Danly
June 8, 2023
CP21-467-001
This is a clear case of regulatory failure. Today, the Commission issued a notice stating that we would not be issuing an order on rehearing in the above-captioned docket.[1] This, despite an earlier notice declaring that, though rehearing may be deemed denied by operation of law, the Commission would issue a subsequent merits order.[2]
Citizens Action Coalition of Indiana (CAC) filed a rehearing request, raising a well-pleaded and unambiguous criticism of the Commission’s underlying Certificate Order,[3] which included the following claim: having calculated the Social Cost of Greenhouse Gases (Social Cost of GHGs), the Commission is now obligated to consider those calculations when conducting its balancing under the Natural Gas Act’s (NGA) public convenience and necessity standard.[4] Of course, we are not obligated to do anything of the kind. While the Supreme Court has found that NGA section “7(e) requires the Commission to evaluate all factors bearing on the public interest,”[5] the Supreme Court has also 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.”[6] As to the “meaning and purposes” of the NGA, the Supreme Court has instructed us in unambiguous terms that the purpose of the NGA is “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[7] Accordingly, when the Commission applies the public convenience and necessity standard, its balancing under that standard must “take meaning” from the purpose of the NGA. How the Commission chooses to conduct that balancing, provided it is in accordance with the “meaning and purposes” of the statute, is afforded deference.[8]
I am not aware of any case where the Commission employed the Social Cost of GHGs, or a similar tool, to make substantive determinations under the NGA. In fact, to the extent to which the Commission has disclosed it at all, it has been offered solely for informational purposes. CAC suggests that we now import that disclosure into our substantive NGA public interest balancing. Such a suggestion not only violates the Commission’s longstanding (and repeatedly upheld) decision not to employ the Social Cost of GHGs for project-level review, it also fails to comport with the Supreme Court’s long-held view that NEPA is merely procedural. NEPA is not a means of “mandating that agencies achieve particular substantive environmental results”;[9] rather, it is a procedural statute that “prescribes the necessary process.”[10] And while the Commission did disclose the Social Cost of GHGs in the Final Environmental Impact Statement (EIS),[11] the Final EIS explained that “[t]he Commission has not determined which, if any, modifications are needed to render the [Social Cost of GHGs] tool useful for project-level analyses.”[12]
In other words, the numbers cannot inform the Commission. And the Commission’s recent NGA issuances, voted on at the April 20, 2023 Commission meeting, underscore that point.[13] In two of those orders, the Commission explained that the Social Cost of GHGs calculations are not required under NEPA, stating that “[a]lthough we are including the social cost of GHG figures for informational purposes, we find that because the social cost of GHGs tool was not developed for project level review and, as discussed below, does not enable the Commission to credibly determine whether the GHG emissions are significant, section 1502.21 of the CEQ regulations does not require its use in this proceeding.”[14]
The courts have repeatedly and unfailingly upheld our decision not to employ the Social Cost of GHGs in our NEPA and NGA analyses.[15] The most recent of these cases, Alaska LNG,[16] definitively stated that we have no obligation of the sort that has been advanced by CAC. Specifically, the D.C. Circuit affirmed the Commission’s decision to not analyze the Social Cost of Carbon in its NEPA analysis, rejected the suggestion that it was required to do so, found that the petitioner’s arguments “fare no better when framed as NGA challenges,” and then, in the very same paragraph, sustained the Commission’s public interest determination as “reasonable and lawful.”[17] That opinion issued not four weeks ago.
But all of this is beside the point. Assuming standing, CAC was entirely within its rights to seek rehearing on any substantive issue it wished.[18] On rehearing, we are obligated to respond to every well-pleaded, substantive argument that is placed before us, and we have failed to do so here.
Not only have we deprived CAC of the benefit of the Commission’s thinking on the matter raised before us, but we have deprived Texas Gas Transmission, LLC (Texas Gas), and the court of that benefit as well. Now, appeal rights having been perfected, CAC can raise an unrebutted, unresponded-to argument before the appellate court.
What happens now? The record will be filed with the court. The Commission will then lose jurisdiction. The Court will be faced with a simple and easily resolved Administrative Procedure Act violation: failure to respond to an argument.[19] The case will be remanded to FERC,[20] and we will go through the whole process before the Commission once again. And all the while, Texas Gas will be trying to develop critical, capital-intensive infrastructure, under a cloud of uncertainty, that the Commission has already found to be in the public convenience and necessity, awaiting court and Commission action for who-knows-how-long.
All that was required was a simple response to a simple question: Is the Commission required to use the Social Cost of GHGs? The Commission has repeatedly said no. The courts have repeatedly affirmed the Commission. We should have said no (again) and allowed CAC to pursue its appeal with a merits order on rehearing. I must also point out that the notice issued by the Office of the Secretary was not a Commission action. That is to say, it was not issued at the direction of the Commission as a body. Instead, this notice was issued by the Office of the Secretary at the direction of one individual, the Chairman, who, as the executive head of the agency, has, and has exercised, the authority to direct today’s notice unilaterally.[21]
Though it may be convenient for some to sidestep questions, our agency is obligated to respond to arguments raised before us. There is no excuse for our failure to issue a merits order when the Commission’s position has been unwavering and the courts have consistently (and recently) upheld the Commission’s position.
For these reasons, I respectfully issue this statement.
[1] FERC Office of the Secretary, Notice of Denial of Rehearing by Operation of Law, Docket No. CP21-467-001 (June 8, 2023) (“The purpose of this Notice is to state that the rehearing request of the above-cited order filed in this proceeding will not be addressed in a future order.”).
[2] FERC Office of the Secretary, Notice of Denial of Rehearing by Operation of Law & Providing for Further Consideration, Docket No. CP21-467-001 (Dec. 22, 2022) (explaining that “[i]n the absence of Commission action on a request for rehearing within 30 days from the date it is filed, the request for rehearing may be deemed to have been denied”) (citations omitted); id. (“As provided in 15 U.S.C. § 717r(a), the request for rehearing of the above-cited order filed in this proceeding will be addressed in a future order to be issued consistent with the requirements of such section. As also provided in 15 U.S.C. § 717r(a), the Commission may modify or set aside its above-cited order, in whole or in part, in such manner as it shall deem proper.”).
[3] Tex. Gas Transmission, LLC, 181 FERC ¶ 61,049 (2022) (Certificate Order).
[4] CAC November 21, 2022 Rehearing Request at 47 (arguing that the Commission was required under the NGA to “weigh the Project’s costs” and, also arguing, in referencing the calculation of the Social Cost of GHGs, that “[t]he Commission has before it a firm figure that would allow an apples-to-apples comparison between the alleged economic benefits of the Project and its $12 billion-worth of climate costs”).
[5] Atl. Ref. Co. v. Pub. Serv. Comm’n of N.Y., 360 U.S. 378, 391 (1959).
[6] NAACP v. Fed. Power Comm’n, 425 U.S. 662, 669 (1976) (NAACP).
[7] Id. at 669-70 (citations omitted); accord Myersville Citizens for a Rural Cmty. v. FERC, 783 F.3d 1301, 1307 (D.C. Cir. 2015) (quoting NAACP, 425 U.S. at 669-70) (Myersville). 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.
[8] See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844 (1984) (“[A] court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.”) (footnote omitted); see also Myersville, 783 F.3d at 1308 (“Because the grant or denial of a Section 7 certificate of public convenience and necessity is a matter ‘peculiarly within the discretion of the Commission,’ Okla. Natural Gas Co. v. Fed. Power Comm’n, 257 F.2d 634, 639 (D.C. Cir. 1958), this court does not ‘substitute its judgment for that of the Commission,’ Nat’l Comm. for the New River v. FERC, 373 F.3d 1323, 1327 (D.C. Cir. 2004).”).
[9] Marsh v. Or. Nat. Res. Council, 490 U.S. 360, 371 (1989); accord Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989) (“[I]t is now well settled that NEPA itself does not mandate particular results, but simply prescribes the necessary process.”) (Methow Valley).
[10] Oglala Sioux Tribe v. U.S. Nuclear Regul. Comm’n, 45 F.4th 291, 299 (D.C. Cir. 2022) (“NEPA is a purely procedural statute that ‘does not mandate particular results, but simply prescribes the necessary process.’”) (quoting Methow Valley, 490 U.S. at 350); see also Methow Valley, 490 U.S. at 351 (explaining that “it would not have violated NEPA if the Forest Service, after complying with [NEPA’s] procedural prerequisites, had decided that the benefits to be derived from downhill skiing at Sandy Butte justified the issuance of a special use permit, notwithstanding the loss of 15 percent, 50 percent, or even 100 percent of the mule deer herd” and also explaining that “[o]ther statutes may impose substantive environmental obligations on federal agencies, but NEPA merely prohibits uninformed—rather than unwise—agency action”) (footnote omitted).
[11] See Commission Staff, Final Environmental Impact Statement for the Henderson County Expansion Project, Docket No. CP21-467-000, at 4-129, 4-130 (Aug. 25, 2022).
[12] Id. at 4-129.
[13] See Driftwood Pipeline LLC, 183 FERC ¶ 61,049, at PP 61, 63 (2023) (explaining the disclosure was “[f]or informational purpose,” finding “that calculating the social cost of GHGs does not enable the Commission to determine credibly whether the reasonably foreseeable GHG emissions associated with a project are significant or not significant in terms of their impact on global climate change,” and explaining that “[c]urrently, however, there are no criteria to identify what monetized values are significant for NEPA purposes, and we are currently unable to identify any such appropriate criteria”) (footnotes omitted); Rio Grande LNG, LLC, 183 FERC ¶ 61,046, at PP 93-94, 101 (2023) (same); Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047, at PP 20-21, 25 (2023) (same).
[14] Rio Grande LNG, LLC, 183 FERC ¶ 61,046 at P 92; Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047 at P 20.
[15] See, e.g., Ctr. for Biological Diversity v. FERC, 67 F.4th 1176, 1184 (D.C. Cir. 2023) (Alaska LNG) (holding that the Commission “had no obligation . . . to consider the social cost of carbon” under NEPA or the NGA and that the Commission acted reasonably in declining to do so); EarthReports, Inc. v. FERC, 828 F.3d 949, 956 (D.C. Cir. 2016) (upholding the Commission’s decision not to use the Social Cost of Carbon); see also 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.”) (citation omitted).
[16] Alaska LNG, 67 F.4th 1176.
[17] Id. at 1188.
[18] 15 U.S.C. § 717r(a) (“Any person, State, municipality, or State commission aggrieved by an order issued by the Commission in a proceeding under this chapter to which such person, State, municipality, or State commission is a party may apply for a rehearing within thirty days after the issuance of such order. . . .”).
[19] See New England Power Generators Ass’n, Inc. v. FERC, 881 F.3d 202, 211 (D.C. Cir. 2018) (finding “that FERC did not engage in the reasoned decisionmaking required by the Administrative Procedure Act” because it “failed to respond to the substantial arguments put forward by Petitioners and failed to square its decision with its past precedent”).
[20] And, given what I view as the erosion of the standards in Allied-Signal, Inc. v. Nuclear Regul. Comm’n, 988 F.2d 146 (D.C. Cir. 1993) (Allied-Signal), possibly vacated. See, e.g., Envtl. Def. Fund v. FERC, 2 F.4th 953, 976-77 (D.C. Cir. 2021), cert. denied sub nom. Spire Missouri Inc. v. Envtl. Def. Fund, 142 S. Ct. 1668, 212 L. Ed. 2d 578 (2022) (“applying” Allied-Signal, 988 F.2d at 150-51); see Spire STL Pipeline LLC, 176 FERC ¶ 61,160 (2021) (Danly, Comm’r, dissenting at P 9) (“[T]he Commission should have sought rehearing of the court’s vacatur of Spire’s certificate order. Vacatur is an extraordinary remedy and, while the court was correct to instruct the Commission regarding its failure to properly explain its decisions, the court misapplied [Allied-Signal], and we should have sought rehearing. But, despite support among a majority of my colleagues to seek rehearing, the Chairman declined to do so. Had the Commission itself sought rehearing, the court may have reversed its decision to vacate the Commission’s order and the Commission could have taken the time it needed on remand to either justify its decision to the court’s satisfaction or taken any other steps it deemed necessary.”) (footnotes omitted).
[21] See 42 U.S.C. § 7171(c) (“The Chairman shall be responsible on behalf of the Commission for the executive and administrative operation of the Commission, including functions of the Commission with respect to (1) the appointment and employment of hearing examiners in accordance with the provisions of Title 5, (2) the selection, appointment, and fixing of the compensation of such personnel as he deems necessary, including an executive director, (3) the supervision of personnel employed by or assigned to the Commission, except that each member of the Commission may select and supervise personnel for his personal staff, (4) the distribution of business among personnel and among administrative units of the Commission, and (5) the procurement of services of experts and consultants in accordance with section 3109 of Title 5.”).