Commissioner James Danly Statement
September 21, 2023
Docket No. CP20-55-000
I write separately to identify the specific aspects of today’s order with which I concur and those elements from which I dissent.
I concur in the decision to grant the requested authorization because I agree that “Port Arthur LNG Phase II’s proposal is not inconsistent with the public interest.”[1]
I also concur in the explanations and findings in paragraphs 61 and 62: the social cost of greenhouse gases (GHG) is neither useful nor part of the Commission’s decision making and the Commission has no means to determine the significance of GHG emissions.[2] Specifically, paragraphs 61 and 62 explain: (1) the disclosure of the social cost of GHG emissions is “for informational purposes”; (2) for the social cost of GHGs, “there are no criteria to identify what monetized values are significant for [National Environmental Policy Act (NEPA)] purposes”; the Commission is not “aware of any . . . method,” including the social cost of GHGs, “that would enable the Commission to determine the significance of reasonably foreseeable GHG emissions”; and (3) therefore, there are “no accepted tools or methods for the Commission to use to determine significance.”[3] This language made its first appearance in orders on the April 20, 2023 open meeting.[4] I voted for this language, as did two of my colleagues, Chairman Phillips and Commissioner Christie.
Finally, I concur in the Commission’s explanation that it is the Commission’s order that controls and therefore any language in the Environmental Assessment (EA) or Supplemental EA that is in tension with the Commission’s order is not relied on or adopted by the Commission.[5] We have had to resort to this language due to inconsistencies between the environmental documents issued by staff and the contents of the Commission’s orders.[6]
Although I support the foregoing, I do not agree with the order in its entirety and would have addressed several parts of it differently. There are a number of statements[7] in this order with which I disagree. There are a number of statements[8] in this order with which I disagree. For example, I object to what appears to be the Commission’s blending of our public interest inquiry under section 3 of the Natural Gas Act (NGA)[9] with the analysis we are obligated to conduct under NEPA, and therefore I dissent to the extent that this order muddles the two. Our obligations under NEPA and the NGA are distinct.[10]
Although I agree that the Commission must act “in accordance with our . . . statutory duties,”[11] we must first examine the scope of our inquiry under the “not . . . [in]consistent with the public interest”[12] standard. The Supreme Court has 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.”[13] The purpose of the NGA, as the Supreme Court has instructed us is “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[14] To the extent to which any Commission issuances attempt to expand the subjects we consider in our inquiry under NGA section 3, any regime we institute must “take meaning” from the purpose of the NGA.
I also would not have included the calculations of the social cost of GHGs in the Commission’s order.[15] As I explained in my separate statement in Boardwalk Storage Co., LLC, that issuance marked a change in the Commission’s approach to the social cost of GHGs in its orders.[16] In a break with this recent practice, Boardwalk and the orders issued on the September 21, 2023 Commission meeting, while including language from the April Orders, also includes calculations for the social cost of GHGs.[17] I do not support their inclusion in this order both because their inclusion breaks with recent practice and because the calculations are meaningless in light of the very finding, stated explicitly in the text of the Commission’s order, that the social cost of GHGs cannot be used for any meaningful purpose to inform project-level analysis, including the assessment of significance. That is why, to state it again, those calculations are being disclosed solely “for informational purposes.” Though I object to their inclusion, surplusage, even when specifically declared to be irrelevant to the reasoning of an order, is not, in itself, unlawful. The Commission has acknowledged, time and again, that the inclusion of these calculations in an environmental document is “for informational purposes” only and has not included the calculations in several orders when they already appear in the NEPA document.[18] The Commission should not have changed course.
As today’s order notes, Congress recently made the first revisions to the text of NEPA since the statute’s enactment in the portion of the Fiscal Responsibility Act of 2023 known as the “Builder Act.”[19] Though I appreciate that the Commission is finally acknowledging these revisions in its order, the Commission should not be so reticent to pursue substantial changes to the process by which it discharges its duties under NEPA. The Builder Act does not include any sort of implementation period, so its provisions became effective when the President signed the Fiscal Responsibility Act into law. The order hints that the Commission will wait for CEQ to offer its interpretation of this text, but there is certainly no legal reason that it must (or can) do so. Whether CEQ’s interpretations of NEPA in guidance documents or regulations bind independent agencies is a “thorny question,”[20] but there is reason to doubt that they do.
Among other revisions, the Builder Act changed the requirement that agencies include in environmental documents an analysis of the “environmental impact of the proposed action”[21] to an analysis of the “reasonably foreseeable environmental effects of the proposed agency action.”[22] In my view, Congress’ amendments reaffirm Public Citizen[23] which held that under NEPA, agencies are only obligated to consider environmental effects for which the agency action itself is the legal proximate cause.[24]
Given this new statutory language, FERC has an opportunity to clarify the appropriate metes and bounds of its obligations under NEPA in light of the jurisdictional limitations of the NGA. Such clarification is particularly called for given the U.S. Court of Appeals for the District of Columbia Circuit’s (D.C. Circuit) mischaracterization of the scope of FERC’s authority in Sabal Trail and its progeny. Sabal Trail miscasts FERC’s analysis of the public convenience and necessity under section 7 of the NGA[25] to hold that the Commission has an obligation to consider the GHG emissions from the end use of the gas transported by certificated pipelines.[26] The NGA, however, confers no authority upon FERC to regulate the end use or local distribution of natural gas.[27] Rather, when deciding whether to approve a pipeline, the Commission determines whether there is a demonstrated need for interstate natural gas transportation capacity. Based on this misunderstanding of FERC’s authority, the Sabal Trail court concludes that FERC must include estimates of the emissions from the end use of the gas and goes even further, in dicta, to assert, without any explanation, that FERC has “legal authority to mitigate” the environmental effects that result from that end use.[28]
This mistake provided one (albeit insufficient) rationale for the Commission’s now-draft Updated Certificate Policy Statement[29] and Interim GHG Policy Statement,[30] which envisioned a mitigation scheme for the GHG emissions from the end use of gas transported on the interstate natural gas system.[31] The Builder Act offers the Commission a rare opportunity to clarify the limits of its authority and move beyond the shadow that the now “draft” policy statements continue to cast over the development of critically needed natural gas infrastructure.
For these reasons, I respectfully concur in part and dissent in part.
[1] Port Arthur LNG Phase II, LLC, 184 FERC ¶ 61,184, at PP 14, 131 (2023).
[2] See id. PP 61, 62.
[3] Id. (citations omitted).
[4] See Driftwood Pipeline LLC, 183 FERC ¶ 61,049, at PP 61, 63 (2023); Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047, at PP 20-21, 25 (2023); Rio Grande LNG, LLC, 183 FERC ¶ 61,046, at PP 92-94, 101 (2023); see also Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047 at P 20 (“although 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 [the Council on Environmental Quality (CEQ)] regulations does not require its use in this proceeding”); Rio Grande LNG, LLC, 183 FERC ¶ 61,046 at P 92 (same) (collectively, “April Orders”).
[5] See Port Arthur LNG Phase II, LLC, 184 FERC ¶ 61,184 at P 130 (“Based on the analysis in the 2021 EA and Supplemental EA, as supplemented or clarified herein, we conclude that if constructed and operated in accordance with the Applicant’s application and supplements, and in compliance with the environmental conditions in the appendix to this Order, our approval of this proposal would not constitute a major federal action significantly affecting the quality of the human environment. We note that the analysis in the 2021 EA and the Supplemental EA provide substantial evidence for our conclusions in this order, but that it is the order itself that serves as the record of decision, consistent with the Commission’s obligations under NEPA and the Administrative Procedure Act. For that reason, to the extent that any of the analysis in the 2021 EA or Supplemental EA is inconsistent with or modified by the Commission’s analysis and findings in the order, it is the order that controls and we do not rely on or adopt any contrary analysis in the 2021 EA or Supplemental EA.”) (footnote omitted).
[6] See Transcon. Gas Pipe Line Co., LLC, 184 FERC ¶ 61,066 (2023) (Danly, Comm’r, dissenting in part at P 14) (“We have witnessed environmental documents including language that runs contrary to Commission orders.”) (citations omitted). Compare WBI Energy Transmission, Inc. Wahpeton Expansion Project Final Environmental Impact Statement (EIS), Docket No. CP22-466-000, at 4-118 (Apr. 7, 2023) (“The Commission stated in a recent Order that a project’s share of contribution to GHG emissions at the national level provides a reasoned basis to consider the significance of the Project’s GHG emissions and their potential impact on climate change; and when states have GHG emissions reduction targets, the Commission will endeavor to consider the GHG emissions of a project on those state goals (or state inventories if the state does not have emissions targets.)”) (citing N. Nat. Gas Co., 174 FERC ¶ 61,189, at P 29 (2021) (Northern Natural)), with Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 (2022) (Danly, Comm’r, concurring in the judgment at PP 2-3) (disagreeing with Northern Natural and explaining that “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”) (citation omitted), and with Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 (Phillips & Christie, Comm’rs, concurring at P 2) (“depart[ing] from Northern Natural, where the Commission stated that emissions for a project were not significant,” explaining that “[i]n Northern Natural, the Commission disclosed the yearly emissions volumes and the estimated contribution to national and state emissions estimates, and then stated that, based on this record, that the emissions were not significant,” and stating that “[i]t is not clear how this determination was made or how a finding of ‘significance’ would have affected our duties and authority under the Natural Gas Act”) (citations omitted). Compare Boardwalk Storage Co. LLC BSC Compression Replacement Project Environmental Assessment, Docket No. CP22-494-000, at 48 (Mar. 13, 2023) (“We include a disclosure of the social cost of GHGs (also referred to as the [‘]social cost of carbon’ [SCC]) to assess climate impacts generated by each additional metric ton of GHGs emitted by the Project.”), with Golden Pass LNG Terminal LLC, 180 FERC ¶ 61,058, at P 24 (2022) (rejecting an argument raised in a comment that “the EA should use the social cost of GHGs (also referred to as the ‘social cost of carbon’ [SCC]) to assess climate impacts generated by each additional ton of GHGs that would be emitted or saved as a result of authorizing the proposed amendment, and that all GHG emissions are significant” by explaining that “we are not relying on or using the social cost of GHGs estimates to make any finding or determination regarding either the impact of the project’s GHG emissions or whether the project is in the public convenience and necessity”) (citations omitted). Notably, the Commission does not review or approve the contents of the EAs and EISs issued by staff. Staff, for those documents, act under the supervision of the Chairman. But great care must be exercised to ensure that environmental documents adhere to Commission precedent. Cf. Great River Hydropower, LLC, 135 FERC ¶ 61,151, at P 44 (2011) (explaining that if a delegated order “is inconsistent with [Commission] precedent . . . , it was wrongly decided”). See also 42 U.S.C. § 7171(c) (explaining that “[t]he 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 . . . 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 . . . .”) (emphasis added).
[7] For example, there are several sentences that were dropped into the order, that were pulled directly from Commission staff’s environmental document, which I would have preferred were not included. As I explain below, the Commission is not given the opportunity to review or weigh in on staff’s environmental documents whatsoever and recently we have seen inconsistencies within those staff issuances with the Commission’s orders, a matter of which is concerning.
[8] For example, there are several sentences that were dropped into the order, that were pulled directly from Commission staff’s environmental document, which I would have preferred were not included. As I explain below, the Commission is not given the opportunity to review or weigh in on staff’s environmental documents whatsoever and recently we have seen inconsistencies within those staff issuances with the Commission’s orders, a matter of which is concerning.
[9] 15 U.S.C. § 717b.
[10] See Commonwealth LNG, LLC, 183 FERC ¶ 61,173, at P 37 (2023); Transcon. Gas Pipe Line Co., LLC, 182 FERC ¶ 61,148, at P 101 (2023).
[11] Port Arthur LNG Phase II, LLC, 184 FERC ¶ 61,184 at P 64 n.134 (“While the Commission is not one of the specified agencies in Executive Order 12,898, the Commission nonetheless addresses environmental justice in its analysis, in accordance with our governing regulations and guidance, and statutory duties.”) (citing 15 U.S.C. § 717b; 18 C.F.R. § 380.12(g) (requiring applicants for projects involving significant aboveground facilities to submit information about the socioeconomic impact area of a project for the Commission’s consideration during NEPA review); FERC Guidance Manual for Environmental Report Preparation at 4-76 to 4-80 (Feb. 2017), https://www.ferc.gov/sites/default/files/2020-04/guidance-manual-volume-1.pdf).
[12] 15 U.S.C. § 717b(a).
[13] NAACP v. FPC, 425 U.S. 662, 669 (1976) (NAACP).
[14] Id. at 669-70; accord Myersville Citizens for a Rural Cmty., Inc. v. FERC, 783 F.3d 1301, 1307 (D.C. Cir. 2015) (Myersville Citizens for a Rural Cmty.) (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.
[15] See Port Arthur LNG Phase II, LLC, 184 FERC ¶ 61,184 at P 56.
[16] See generally Boardwalk Storage Co., LLC, 184 FERC ¶ 61,062 (2023) (Boardwalk) (Danly, Comm’r, concurring at PP 1-7).
[17] Boardwalk, 184 FERC ¶ 61,062 at P 24. Following the Commission’s adoption at the April open meeting of our new social cost of GHGs language, our orders have not included those calculations when they have appeared in the Commission staff’s environmental documents. See Equitrans, L.P., 183 FERC ¶ 61,200, at P 47 (2023) (explaining that “[f]or informational purposes, Commission staff estimated the social cost of GHGs associated with reasonably foreseeable emissions from the project.”) (Equitrans). Even before the April 20, 2023 Commission meeting, the calculations were not included in several orders where the environmental document already contained the calculations. See, e.g., Cameron LNG, LLC, 182 FERC ¶ 61,173, at P 37 (2023) (“Further, the EA, for informational purposes, disclosed the social cost of GHGs associated with the project’s reasonably foreseeable GHG emissions.”) (footnote omitted); Commonwealth LNG, LLC, 181 FERC ¶ 61,143, at P 75 (2022) (stating that “the final EIS disclosed the social cost of GHGs associated with the project’s reasonably foreseeable GHG emissions” and not including the calculations in the order) (citation omitted). I note that there are some inconsistencies in this prior to the issuance of the orders voted on at the April open meeting, with occasional orders including the calculations. In every circumstance, though, I have objected to the inclusion of the social cost of GHGs calculations in our orders and will continue to do so. Instead, the Commission has included the disclosure of the social cost of GHGs in its orders “for informational purposes” when those calculations were not included as part of the EAs or EISs or when the calculation in the staff’s environmental document included (improperly) downstream emissions that are not reasonably foreseeable, e.g., the downstream emissions from exports. See Tex. LNG Brownsville LLC, 183 FERC ¶ 61,047 at P 24 (including the calculations in the remand order because they were not in the environmental document); Rio Grande LNG, LLC, 183 FERC ¶ 61,046 at PP 98-99 (same); Driftwood Pipeline LLC, 183 FERC ¶ 61,049 at PP 57 nn.109 & 112, 61-62 (disclosing a “revised estimate of the social cost of GHGs associated with the reasonably foreseeable emissions” in the Commission’s order because the calculation in the final EIS included in the calculation downstream GHG emissions from exports, which are not reasonably foreseeable).
[18] Equitrans, L.P., 183 FERC ¶ 61,200 at P 47.
[19] See FISCAL RESPONSIBILITY ACT OF 2023, Pub. L. 118-5, 137 Stat 10, at § 321 (June 3, 2023) (providing the “Builder Act”) (Fiscal Responsibility Act).
[20] Oglala Sioux Tribe v. U.S. Nuclear Regulatory Comm’n, 45 F.4th 291, 300 (D.C. Cir. 2022) (citing Food & Water Watch v. U.S. Dep’t of Agric., 1 F.4th 1112, 1119 (D.C. Cir. 2021) (Randolph, J., concurring) (questioning CEQ’s authority to promulgate binding regulations)).
[21] 42 U.S.C. § 4332(c)(i) (1970).
[22] 42 U.S.C. § 4332(c)(i) (2023) (emphasis added).
[23] Dep’t of Transp. v. Pub. Citizen, 541 U.S. 752 (2004) (Public Citizen).
[24] See 541 U.S. at 767.
[25] 15 U.S.C. § 717f.
[26] See Sierra Club v. FERC, 867 F.3d 1357, 1373 (Sabal Trail) (“Because FERC could deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment, the agency is a ‘legally relevant cause’ of the direct and indirect environmental effects of pipelines it approves. Public Citizen thus did not excuse FERC from considering these indirect effects.”) (citation & footnote omitted). I note, however, that 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.”).
[27] See 15 U.S.C. § 717(b) (“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.”) (emphasis added).
[28] Sabal Trail, 867 F.3d at 1374.
[29] Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,107 (2022) (Updated Certificate Policy Statement).
[30] Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Revs., 178 FERC ¶ 61,108 (2022) (Interim GHG Policy Statement).
[31] 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, Updated Certificate Policy Statement, 178 FERC ¶ 61,107 and Interim GHG Policy Statement, 178 FERC ¶ 61,108 to “draft” policy statements).