Commissioner Cheryl A. LaFleur Concurrence in Part, Dissent in Part on Millennium Pipeline

Commissioner Cheryl A. LaFleur
July 24, 2018
Docket No. CP16-486-001
Item No. C-7

Concurrence in Part, Dissent in Part on Millennium Pipeline

“The Commission denied rehearing of the order approving Millennium’s Eastern System Upgrade Project on July 19, 2018. I supported our original authorization of this project, finding that on balance it was in the public interest. While I concur in part because I continue to find the project is needed, I write separately to provide additional context regarding a number of concerns I have with respect to the order.

“As I explained in my concurrence in Broad Run, 1 despite my ongoing disagreement with the Commission’s new approach to its environmental review of proposed pipeline projects, I have attempted to address each case based on the facts in the record and the governing law as I read it. I do believe that many pipelines are needed and in the public interest, and I have been focusing my efforts on determining if, and how, I can support these projects despite my strong disagreements on the Commission’s policy and practice on addressing climate change impacts of pipeline projects. This has become particularly difficult in recent months since the Sabal Trail 2 remand order and the subsequent decision in New Market 3 to change our policy on disclosure and consideration of downstream and upstream greenhouse gases (GHG) emissions impacts in our pipeline review.

“First, with regard to the downstream GHG emissions associated with the Eastern System Upgrade Project, I support the quantification and disclosure of the upper-bound estimate of the GHG emissions, but I am troubled by the manner in which the majority continues to evade a significance determination of downstream GHG emissions. The final Environmental Assessment (EA) for the project estimated that if all 223,000 dekatherms per day (Dth/d) of natural gas were transported and combusted, it would result in the emissions of about 4.3 million metric tpy of CO2e. These GHG emissions would increase regional GHG emissions by 1.1 percent, and national GHG emissions by 0.01 percent. 4 I recognize that this full-burn estimate is simply a mathematical derivative of pipeline volume, but I believe it should be disclosed and considered as part of my public interest determination, particularly where there is not more precise evidence of downstream pipeline utilization. This upper-bound GHG quantification and analysis is the bare minimum we should be doing as part of our environmental review of pipeline projects. 5 However, I believe we have an affirmative duty to seek more information in the record regarding the identified end uses, before simply concluding that we do not know where the gas going, and relying on the full-burn estimate. 6 This would enable the Commission to more accurately assess indirect impacts of downstream GHG emissions by calculating gross and net GHG emissions as part of our National Environmental Policy Act (NEPA) analysis as the Commission did in Sabal Trail. 7

“I am frustrated by the majority’s continued assertion that there is “no standard established by international or federal policy, or by a recognized scientific body that would assist us to ascribe significance to a given rate or volume of GHG emissions.” 8 One way the Commission could assess the significance of a given rate or volume of GHG emissions is to compare the downstream GHG emissions associated with an individual project to the total state, regional, and/or national emission inventories. 9 Indeed, the Commission did conduct this analysis in this case and thus, could have assessed whether the measured impacts were significant. We could also translate the GHG emissions from a particular project into monetized climate damages using the Social Cost of Carbon, allowing the Commission to provide context to the quantified rate or volume of GHG emissions of a pipeline project and ascribe significance as part of our NEPA review. 10

“While the Commission has yet to reach a significance determination regarding downstream GHGs emissions, and such a determination would require thoughtful analysis and decision-making by the Commission, I note that the Commission makes challenging determinations on quantitative and qualitative issues in other areas of our work. 11 Just because making a significance determination on downstream GHG emissions would be difficult does not relieve the Commission of its responsibility.

“Second, I continue to reject the majority’s assertion that there is not a “standard methodology to determine how a project’s contribution to GHG emissions would meaningfully translate into physical effects on the environment for purposes of evaluating the Project’s impacts on climate change.” 12 But that is precisely the use for which the Social Cost of Carbon was developed—it is a scientifically-derived metric to translate tonnage of carbon dioxide or other GHGs to the cost of long-term climate harm. 13 In fact, the U.S. Environmental Protection Agency (EPA) submitted comments in our Notice of Inquiry the Certificate Policy Statement docket 14 explaining the virtue of the Social Cost of Carbon as a tool for quantifying and monetizing GHG emissions changes. 15 EPA concludes that “even absent a full benefit cost analysis [BCA], Social Cost of Carbon and other greenhouse gases [SC-GHG] estimates may be used for project analysis when FERC determines that a monetary assessment of impacts associated with the estimated net change in GHG emissions provides useful information in its environmental review or public interest determination.” 16 I am particularly troubled by what I consider to be the majority’s mischaracterization of the EPA’s comments as not supportive of the use of Social Cost of Carbon. 17 As I have stated before, I believe the Social Cost of Carbon can meaningfully inform the Commission’s decision-making to reflect the climate change impacts of a particular project. 18



“I recognize I am taking the unusual step of issuing a late statement on this order, following its issuance at the July 2018 Commission open meeting. I have always tried to support a majority order by concurring if possible, even if I articulate in my concurrence significant differences with the language of the order. However, where there are elements of an order (including late changes) with which I strongly disagree, and I am not able to negotiate language I can support, at some point I must exercise my right to dissent. 19


“For all of these reasons, I concur in part and dissent in part.”




 

• 11 Tennessee Gas Pipeline Company, 163 FERC ¶ 61,190 (2018) (LaFleur, Comm’r, concurring) (Broad Run).
• 22 Florida Southeast Connection, LLC, 162 FERC ¶ 61,233 (2018) (LaFleur, Comm’r, dissenting in part) (Sabal Trail).
• 33 Dominion Transmission Inc., 163 FERC ¶ 61,128 (2018) (LaFleur, Comm’r, dissenting in part) (New Market).
• 44 Millennium Pipeline Company, L.L.C., 161 FERC ¶ 61,229 at P 164 (2017) (Millennium Certificate Order). Because the project would deliver gas to the Algonquin pipeline system, Commission staff compared the 2015 GHG inventory of the states served by the project, New Jersey, New York, Connecticut, Rhode Island and Massachusetts, to the downstream emissions associated with the project to arrive at the potential increase in GHG emissions volumes. Id. at P 165 & n. 228.
• 55 Broad Run, 163 FERC ¶ 61,190. To address my concerns about the Commission’s decision to ignore downstream emissions impacts in the Broad Run rehearing order, I calculated and disclosed the full-burn estimate of the downstream GHG emissions from the project, and considered them as part of my public interest determination.
• 66 In my view, it is reasonably foreseeable in the vast majority of cases that the gas being transported by a pipeline we authorize will be burned for electric generation or residential, commercial, or industrial end uses. In those circumstances, there is a reasonably close causal relationship between the Commission’s action to authorize a pipeline project that will transport gas and the downstream GHG emissions that result from burning the transported gas. See Mid States Coalition for Progress v. Surface Transportation Board, 345 F.3d 520, 549 (8th Cir. 2003) (Mid States). In Mid States, the Court concluded that the Surface Transportation Board erred by failing to consider the downstream impacts of the burning of transported coal. Even though the record lacked specificity regarding the extent to which the transported coal would be burned, the Court concluded the nature of the impact was clear.
• 77 Sabal Trail, 162 FERC ¶ 61,233.
• 88 Millennium Pipeline Company, L.L.C., 164 FERC ¶ 61,039 at n. 49 (2018) (Millennium Rehearing Order).
• 99 While the Millennium Certificate Order did disclose the regional and national comparison data, it did not ascribe significance to the percent increase in GHG emissions, and instead concludes that it cannot making a finding on whether a particular amount of GHG emissions is significant.
• 1010 Social Cost of Carbon is meant to measure the physical, incremental impacts from a project including changes in net agricultural productivity, human health, property loss and damages from increased flood risk, and energy demand changes.
• 1111 Many of the core areas of the Commission’s work have required the development of analytical frameworks, often a combination of quantitative measurements and qualitative assessments, to fulfill the Commission’s responsibilities under its broad authorizing statutes. This work regularly requires that the Commission exercise judgment, based on its expertise, precedent, and the record before it. For example, to help determine just and reasonable returns on equity (ROEs) under the Federal Power Act, Natural Gas Act (NGA), and Interstate Commerce Act, the Commission identifies a proxy group of comparably risky companies, applies a discounted cash flow method to determine a range of potentially reasonable ROEs (i.e., the zone of reasonableness), and then considers various factors to determine the just and reasonable ROE within that range. See also, e.g., Promoting Transmission Investment through Pricing Reform, Order No. 679, FERC Stats. & Regs. ¶ 31,222, order on reh’g, Order No. 679-A, FERC Stats. & Regs. ¶ 31,236 (2006), order on reh’g, 119 FERC ¶ 61,062 (2007) (establishing Commission regulations and policy for reviewing requests for transmission incentives); Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, Order No. 1000, FERC Stats. & Regs. ¶ 31,323 (2011), order on reh’g, Order No. 1000-A, 139 FERC ¶ 61,132, order on reh’g and clarification, Order No. 1000-B, 141 FERC ¶ 61,044 (2012), aff’d sub nom. S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014) (requiring, among other things, the development of regional cost allocation methods subject to certain general cost allocation principles); BP Pipelines (Alaska) Inc., Opinion No. 544, 153 FERC ¶ 61,233 (2015) (conducting a prudence review of a significant expansion of the Trans Alaska Pipeline System).
• 1212 Millennium Rehearing Order at P 22.
• 1313 https://www.epa.gov/sites/production/files/2016-12/documents/social_cost_of_carbon_fact_sheet.pdf; See, e.g., Sabal Trail, 162 FERC ¶ 61,233 (LaFleur, Comm’r, dissenting in part); New Market, 163 FERC ¶ 61,128 (LaFleur, Comm’r, dissenting in part); Florida Southeast Connection, LLC, 163 FERC ¶ 61,158 (2018) (LaFleur, Comm’r, concurring); and Broad Run, 163 FERC ¶ 61,190 (LaFleur, Comm’r, concurring).
• 1414 Notice of Inquiry on the Certificate Policy Statement, 163 FERC ¶ 61,042 (2018).
• 1515 See also, EPA, Comments, Certification of New Interstate Natural Gas Facilities, Notice of Inquiry, 163 FERC ¶ 61,042 (2018), Docket No. PL18-1-000 (filed June 21, 2018). In the comments, EPA explains that estimates of the Social Cost of Carbon allow an agency to “incorporate the societal value of changes in carbon dioxide and other GHG emissions into benefit-cost analyses of actions that have small, or marginal, impacts on cumulative global emissions.”
• 1616 Id.
• 1717 The majority order cherry-picks one sentence to imply that EPA’s comments are not supportive of using the Social Cost of Carbon where we have not developed a full cost-benefit analysis. Millennium Rehearing Order at n. 75.
• 1818 I also disagree with the majority’s discussion of Montana Environmental Information Center v. U.S. Office of Surface Mining. The Court explains the circumstances when an agency should use the Social Cost of Carbon as part of a NEPA review to give context to projected GHG emissions by considering the cost of those GHG emissions. 274 F. Supp. 3d 1074 (D. Mont. 2017), amended in part, adhered to in part sub nom. Montana Envtl. Info. Ctr. v. U. S. Office of Surface Mining, No. CV 15-106-M-DWM, 2017 WL 5047901 (D. Mont. Nov. 3, 2017). I believe the Court’s discussion on the Social Cost of Carbon demonstrates that the Social Cost of Carbon is an appropriate metric for agencies to use as part of an environmental review.
• 1919 See, DTE Midstream Appalachia, LLC, 162 FERC ¶ 61,238 (2018) (LaFleur, Comm’r, dissenting in part) (dissenting in part, noting strong disagreement with the Commission’s new policy approach towards motions to intervene out of time); New Market, 163 FERC ¶ 61,128 (LaFleur, Comm’r, dissenting in part) (dissenting in part on the policy change announced limiting the Commission’s review and disclosure of upstream and downstream GHG impacts as part of our responsibilities under NEPA and the NGA).