Statement of Commissioner James P. Danly
March 17, 2023
CP21-94-001
I commend to the reader’s attention my separate statement to the underlying order.[1] I want to make clear that this order has flaws, some of which, I find, persist from the underlying order.[2] I also wish to impress upon the reader that I recognize the difficult position into which the Commission’s actions have placed the project applicant.
While I concur with this order because there is a demonstrated need for the project, I nevertheless must acknowledge that this order falls short of ideal. It fails to lay out—in plain terms—much of what is really at issue. Before I explain why, I want to emphasize that my view regarding this proceeding is that neither the upstream greenhouse gas (GHG) emissions nor the downstream GHG emissions are reasonably foreseeable.[3]
Paragraph 101 contains this order’s critical language. It purports to distinguish our National Environmental Policy Act (NEPA) analysis from our obligations under the NGA. And, of course, it ought to. They are two different statutes with two distinct purposes. NEPA is—and has always been—a procedural statute.[4] It can, and does, require no substantive outcomes.[5] What it requires is a “hard look”[6] at the effects of the contemplated actions that a federal agency proposes to undertake. The NGA, in comparison, is a substantive statute and the means by which Congress has charged the Commission with the task of “encourag[ing] the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[7]
With respect to the NGA, however, today’s order runs right up to the edge of its logical conclusion and then stalls at the last moment.[8] Not only are our analyses under NEPA and the NGA distinct (as they must be),[9] in fact, prudence would counsel us to unambiguously establish the limits of our jurisdiction under the NGA[10] and declare that we will not consider induced upstream production or its effects as part of our public convenience and necessity determination.[11] Why? Because upstream activities lie—by the unambiguous terms of the statute—wholly outside of our jurisdiction.[12]
Paragraph 101 of today’s order exposes a fundamental question regarding the proper administration of the NGA. Should we use it to accomplish whatever we want, even if our policy objectives run contrary to the purpose of the NGA?[13] Or should we resolve upon disciplining ourselves to act in accordance with the purpose of the statute, bound by the authorities delegated by Congress[14] and the exemptions to those authorities Congress specifically enumerated? Obviously, the latter. We could no more reasonably deny a pipeline for the effects of induced upstream production, which the statute places outside our jurisdiction, than we could deny an NGA section 3 authorization[15] for an LNG export terminal because we do not like the effects that the expected exports would have on international gas markets.[16] That determination rests solely with the Department of Energy, which is charged with authorizing “the export of natural gas as a commodity.”[17] The same holds for any induced upstream effects on production, even if they could be found traceable to the proposed project. The statute consigns those powers to the states. And it does so explicitly:
The provisions of this chapter shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, and to the importation or exportation of natural gas in foreign commerce and to persons engaged in such importation or exportation, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.[18]
I should end by noting that, despite my criticism, I am pleased we are acting on this order. I only wish that the Commission had acted sooner, perhaps by having granted Transcontinental Gas Pipe Line Company, LLC’s (Transco) February 14, 2023 motion requesting that the Commission waive section 157.23(b)[19] of our regulations to permit Transco to receive authorization to proceed with the limited activity of non-mechanized tree felling on the project route. For the reasons stated in my earlier statement, I am concerned that the delay in the Commission’s action in this proceeding have adversely affected the project’s ability to be placed into service 2023-2024 winter season and by the targeted in-service date of December 1, 2023.[20]
For these reasons, I respectfully concur.
[1] Transcon. Gas Pipe Line Co., LLC, 182 FERC ¶ 61,006 (2023) (Certificate Order) (Danly, Comm’r, concurring in part & dissenting in part).
[2] See, e.g., id. (Danly, Comm’r, concurring in part & dissenting in part at P 1 & n.2) (stating that “[a]s in other recent [Natural Gas Act (NGA)] section 7 issuances, there are a number of flaws in this order” and listing flaws); id. (Danly, Comm’r, concurring in part & dissenting in part at P 2) (disagreeing with “language [in the Certificate Order that] could perhaps be read to imply that the precedent agreements for 100% of a project’s capacity (by primarily unaffiliated shippers, no less) might, by themselves, be insufficient to demonstrate need or, perhaps more troubling, that other evidence proffered in the face of such precedent agreements, somehow tip the evidence against a finding of need”).
[3] I pause to note that I disagree with the Certificate Order’s finding and this order’s restatement of that finding that the downstream emissions are reasonably foreseeable. See Certificate Order, 182 FERC ¶ 61,006 at P 67 (“[T]he emissions from the downstream combustion of the gas transported by the project are reasonably foreseeable emissions.”), order on reh’g, 182 FERC ¶ 61,148, at P 106 (2023) (identifying the reasonably foreseeable emissions as including the downstream GHG emissions). The facts here, like in Food & Water Watch v. FERC, 28 F.4th 277 (D.C. Cir. 2022) (Food & Water Watch), involve adding capacity to provide incremental transportation service primarily to local distribution company shippers. In this proceeding, while a majority of the capacity is subscribed by local distribution companies, there are also two shippers that are natural gas marketers. I recognize that the court in Food & Water Watch, a proceeding concerning a project that serves local distribution companies, “concluded that the end use of the transported gas is reasonably foreseeable.” 28 F.4th at 289. 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.” Id. (emphasis added). The local distribution companies and natural gas marketers at issue here and the discrete, known generators in Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017) (Sabal Trail) are dissimilar enough that the Sabal Trail precedent cannot directly apply. We have not yet acted on the Food & Water Watch 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. 541 U.S. 752, 767 (2004) (Public Citizen) (“NEPA requires ‘a reasonably close causal relationship’ between the environmental effect and the alleged cause. The Court analogized this requirement to the ‘familiar doctrine of proximate cause from tort law.’”) (citation omitted). My views are not idiosyncratic. Both the partial dissenting statement in Sabal Trail and the Court of Appeals for the Eleventh Circuit agree. 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’rs, 941 F.3d 1288, 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.”).
[4] See, e.g., Public Citizen, 541 U.S. at 756-57 (explaining that “NEPA imposes only procedural requirements on federal agencies with a particular focus on requiring agencies to undertake analyses of the environmental impact of their proposals and actions.”) (citation omitted).
[5] We know, of course, that NEPA is not a means of “mandating that agencies achieve particular substantive environmental results.” Marsh v. Or. Nat. Res. Council, 490 U.S. 360, 371 (1989). It instead serves to “impose[] only procedural requirements on federal agencies with a particular focus on requiring agencies to undertake analyses of the environmental impact of their proposals and actions.” Public Citizen, 541 U.S. at, 756-57.
[6] See Baltimore Gas & Elec. Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 97 (1983) (“Congress in enacting NEPA, however, did not require agencies to elevate environmental concerns over other appropriate considerations. Rather, it required only that the agency take a ‘hard look’ at the environmental consequences before taking a major action.”) (citations omitted).
[7] NAACP v. FPC, 425 U.S. 662, 669-70 (1976) (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). 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 Transcon. Gas Pipe Line Co., LLC, 182 FERC ¶ 61,148 at P 101 (“Even if substantial evidence demonstrated reasonable foreseeability and a causal connection between a proposed project and upstream production, which as discussed is absent here, no court has ever held that the Commission must consider upstream GHG impacts as part of its NGA analysis. The text of the NGA makes clear that upstream activities such as exploration, production and gathering are not under the Commission’s jurisdiction, and courts have upheld our determinations that we do not need to consider upstream emissions as Riverkeeper suggests.”) (emphasis in original) (citation omitted).
[9] See id. (“The NGA analysis is distinct from the NEPA analysis.”).
[10] Of course, Commissioner Clements is entirely correct when she states that the Commission is bound to follow controlling judicial precedent. See Transcon. Gas Pipe Line Co., LLC, 182 FERC ¶ 61,148 (Clements, Comm’r, concurring in part at P 5). Sabal Trail requires the Commission to conduct certain analyses regarding downstream GHG emissions, under its narrow set of facts, and in satisfaction of the court’s view of our obligations under NEPA. The court also stated, in its discussion on indirect effects, and seemingly in an implicit ruling on our jurisdiction under the NGA (a separate inquiry from that required under NEPA) that “FERC could deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment.” Sabal Trail, 867 F.3d at 1373 (citation omitted). But National Cable & Telecommunications Association v. Brand X Internet Services holds that even following a binding judicial issuance, agencies remain free in subsequent proceedings to offer reasonable interpretations of the jurisdiction conferred upon them by their organic statutes. 545 U.S. 967, 982-83 (2005) (Brand X). This proposition, for better or for worse, is now black letter administrative law. Far from flouting the authority of the courts, I suggest no more than that the Commission act within the remit confirmed in Brand X by offering a reasonable interpretation of our statute which would limit our jurisdiction consistent with the NGA’s purpose and its plain text. See 15 U.S.C. § 717(b) (listing the exemptions from the Commission’s jurisdiction). And we can do so secure in the knowledge that such an interpretation—again, for better or for worse—will be accorded the deference guaranteed by Chevron. See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843 (1984) (Chevron) (“[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”).
[11] See Off. of Consumers’ Counsel v. FERC, 655 F.2d 1132, 1147 (D.C. Cir. 1980) (“FERC’s authority to consider all factors bearing on the public interest when issuing certificates means authority to look into those factors which reasonably relate to the purposes for which FERC was given certification authority. It does not imply authority to issue orders regarding any circumstance in which FERC’s regulatory tools might be useful. In carrying out its statutory certification task FERC must recognize that ‘a need for federal regulation does not establish FPC jurisdiction that Congress has not granted.’”) (quoting FPC v. La. Power & Light Co., 406 U.S. 621, 635-36 (1972)); Columbia Gas Transmission Corp. v. FERC, 404 F.3d 459, 463 (D.C. Cir. 2005) (explaining that “[w]here an activity or entity falls within NGA § 1(b)’s exemption . . . , the provisions of NGA §§ 4, 5 and 7 . . . neither expand the Commission’s jurisdiction nor override § 1(b)’s . . . exemption”) (quoting Conoco Inc. v. FERC, 90 F.3d 536, 552 (D.C. Cir. 1996)) (internal quotation marks omitted). But see Henry v. Fed. Power Comm’n, 513 F.2d 395, 403 (D.C. Cir. 1975) (“Of particular and almost paramount significance for the subject under discussion is FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 81 S.Ct. 435, 5 L.Ed.2d 377 (1961), where the Court expressly held that the Commission’s power under [§] 7 to consider matters of the public interest when deciding whether to issue a certificate for jurisdictional facilities extends generally to a consideration of ‘All factors bearing on the public interest,’ and specifically extends to matters that are excluded from the direct regulatory jurisdiction of the Commission.”).
[12] See 15 U.S.C. § 717(b) (stating that the Commission’s jurisdiction “shall not apply . . . to the facilities used for . . . the production or gathering of natural gas”).
[13] See NAACP, 425 U.S. at 669 (explaining that the purpose of the NGA is “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices”) (citations omitted).
[14] See West Virginia v. Env’t. Prot. Agency, 142 S. Ct. 2587, 2609 (2022) (“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.’”) (citation omitted).
[15] 15 U.S.C. § 717b.
[16] See Port Arthur LNG, LLC, 181 FERC ¶ 61,024, at P 12 & n.35 (2022) (stating in an extension of time proceeding that “[t]he Commission will not consider Sierra Club’s assertion that we must examine the project’s impact on domestic prices and supply as it is an attempt to re-litigate the issuance of the Authorization Order” and that “[n]or could we consider impacts on domestic prices and supply as the Commission’s authority under the Natural Gas Act is limited to the authorization of the siting, construction, and operation of LNG export facilities, while the consideration of the impact of export of LNG as a commodity is solely under the Department of Energy’s authority”) (emphasis added) (citation omitted); Commonwealth LNG, LLC, 181 FERC ¶ 61,143, at P 13 (2022) (“The Commission’s authority under NGA section 3 applies ‘only to the siting and the operation of the facilities necessary to accomplish an export[,]’ while ‘export decisions [are] squarely and exclusively within the [DOE]’s wheelhouse.’ Similarly, issues related to the impacts of natural gas development and production are related to DOE’s authorization of the export and not the Commission’s siting of the facilities . . . .”) (citations omitted); Columbia Gulf Transmission, LLC, 180 FERC ¶ 61,206, at PP 78, 80 (2022) (explaining for a NGA section 7 project that would provide incremental firm interstate natural gas transportation service to an LNG export facility that “the downstream GHG emissions are attributable to DOE’s ‘independent decision to allow exports—a decision over which the Commission has no regulatory authority’” and that “[w]e see no basis in the NGA for the Commission to encroach upon DOE’s sole authority over the review and authorization of exports of natural gas”); Tenn. Gas Pipeline Co., L.L.C., 180 FERC ¶ 61,205, at PP 62, 64 (2022) (same).
[17] EarthReports, Inc. v. FERC, 828 F.3d 949, 952-53 (D.C. Cir. 2016) (explaining that the Department of Energy has “exclusive authority over the export of natural gas as a commodity”).
[18] 15 U.S.C. § 717(b).
[19] 18 C.F.R. § 157.23(b) (explaining that for “orders issued pursuant to 15 U.S.C. 717b or 15 U.S.C. 717f(c) authorizing the construction of new natural gas transportation, export, or import facilities, no authorization to proceed with construction activities will be issued: (a) Until the time for the filing of a request for rehearing under 15 U.S.C. 717r(a) has expired with no such request being filed, or (b) If a timely request for rehearing raising issues reflecting opposition to project construction, operation, or need is filed, until: (1) The request is no longer pending before the Commission; (2) The record of the proceeding is filed with the court of appeals; or (3) 90 days has passed after the date that the request for rehearing may be deemed to have been denied under 15 U.S.C. 717r(a)”).
[20] See Certificate Order, 182 FERC ¶ 61,006 (Danly, Comm’r, concurring in part & dissenting in part at PP 3-5); see also Application at 13; New Jersey Natural Gas Company July 26, 2022 Supplementary Comments in Support of Transco Regional Energy Access Expansion Project at 2 (“Transco proposes to place the REAE Project in service by December 1, 2023 to meet the needs of consumers during the 2023/2024 winter heating season.”).