Commissioner Cheryl A. LaFleur Dissent in Part on Order on Remand Reinstating Certificate and Abandonment Authorization

Commissioner Cheryl A. LaFleur Statement
March 14, 2018
Docket Nos. CP14-554-002, CP15-16-003 & CP15-17-002


"Today’s order reinstates the certificate authorizations for the Southeast Market Pipelines Project (SMP Project).1 I still believe that the SMP Project is in the public interest after carefully balancing the need for the project and its environmental impacts. In particular, I find that the SMP Project is needed to deliver gas to four downstream power plant customers.2

"The U.S. Court of Appeals for the D.C. Circuit (the “Court”) vacated and remanded the Commission’s authorization of the SMP Project, directing the Commission to address two issues; first, the Commission was directed to both quantify and consider the project’s downstream greenhouse gas (GHG) emissions or explain in more detail why it cannot do so; and second, the Commission was directed to explain whether it still adheres to its prior position that the Social Cost of Carbon tool is not useful in performing its NEPA review.3 I am dissenting in part because I cannot support the Commission’s responses to the Court on downstream GHG emissions and the Social Cost of Carbon.

GHG Emissions
"I agree with the Court in Sierra Club that the downstream GHG emissions that result from burning the natural gas transported by the SMP Project are an indirect impact of the project.4 I believe that, even though this Commission does not authorize the construction of power plants to burn the gas transported by the SMP Project, there is still a causal relationship between the SMP Project and the end-use emissions generated from the four downstream power plants and those emissions are reasonably foreseeable.5 As directed by the Court, in the final Supplemental Environmental Impact Statement (SEIS)6 Commission staff quantified the gross, net and full burn of downstream GHG emissions.7 I believe that this analysis is appropriate and consistent with how the Commission should conduct its environmental review of pipeline projects.

"While the Commission appropriately calculated the emissions in the SEIS consistent with the Court’s directive, I am troubled by the manner in which today’s order addresses the significance of the downstream GHG emissions. The order fails to even concede that GHG emissions are an indirect impact that must be quantified in NEPA. More broadly, the order asserts that GHG emissions quantifications cannot “meaningfully inform” our public interest determination. I fundamentally disagree.

"NEPA requires us to include discussion of indirect effects and their significance in our environmental review. The order states that Commission staff is unable to determine whether the gross and net estimates of downstream GHG emissions are significant and the order affirms that finding.8 I reject the contention that the Commission is unable to discern the significance of GHG emissions. We are required by NEPA to reach a determination regarding the significance of all environmental impacts, including downstream GHG emissions. It is our responsibility to use the best information we have to make that determination.

"In this case, we can gauge significance by comparing the gross and net GHG emissions of the SMP Project to the total state and national emission inventories to calculate how the SMP Project increases those GHG inventories.9 Here, I believe that a net increase of 3.6 percent of the Florida inventory for a single pipeline project is significant. Due to the need of the project, I believe that increase is acceptable but should be disclosed and assessed.

Social Cost of Carbon
"On the Court’s second issue, I cannot support the Commission’s response to the Court regarding the Commission’s use of the Social Cost of Carbon as part of its pipeline environmental review. In the SEIS, Commission staff explained that the Social Cost of Carbon tool was not appropriate for our NEPA review, and stated that the questions surrounding the Commission’s policy on the Social Cost of Carbon were more appropriate for Commission determination. I generally agree that the Social Cost of Carbon as a tool for cost-benefit analysis does not fit neatly within our NEPA review.10 The Social Cost of Carbon has traditionally been used as a means to monetize the cost impacts of carbon emissions, as part of an overall cost and benefits approach to an agency’s consideration of a proposed action or rulemaking. The Commission does not monetize the costs and benefits of a proposed pipeline project, largely, because to date, we have not sought to develop the record with evidence that would that support this type of cost-benefit approach to our pipeline reviews.

"However, I cannot accept the Commission’s justifications for excluding the Social Cost of Carbon from its consideration of the SMP Project. Today’s order generally finds that the Social Cost of Carbon cannot meaningfully inform our decisions on proposed pipeline projects. Further, the order claims that the Social Cost Carbon is not an appropriate tool for evaluating the significance of downstream GHG emissions. I disagree. That is precisely the use for which the Social Cost of Carbon was developed—it is a scientifically-derived tool to translate tonnage of carbon dioxide or other GHGs to the cost of long-term climate harm.11 I have drawn the simplistic analogy of human food consumption and diet. It would be convenient for a person to say “I guess it is fine to eat this donut, because there is simply no way to assess if it will make me fat.” But there is such a tool, in the form of calories, which have been scientifically derived to translate the consumption of a specific food item to impact on weight gain. Similarly, we are able to estimate what the long-term consequence of a ton of carbon dioxide emissions is likely to be, by use of the Social Cost of Carbon tool.

"Today’s order recites a number of technical and policy arguments to attack the usefulness of the Social Cost of Carbon. It is true, as the majority asserts, that utilizing gross GHG emissions associated with the gas to be transported through a pipeline would yield the same Social Cost of Carbon calculation for every pipeline of equivalent size. But, if the Commission had information regarding net GHG emissions, I believe we could better account for changes in GHG emissions resulting from the end-use of the transported gas, and calculate a Social Cost of Carbon that accurately reflects the climate change impacts of a particular project.

"The majority concedes that those involved in the upstream production and downstream consumption of fossil fuels may meaningfully use the Social Cost of Carbon in assessing their actions, but nonetheless rejects the view that the pipeline that links production and consumption can use that same metric to assess its actions.12 That distinction is unpersuasive to me.

"The majority also contends that there are technical challenges due to the lack of consensus on the appropriate discount rate. However, the Commission could estimate the appropriate discount rate or to use more than one discount rate in our calculations or to provide a range of numbers for consideration.


"Looking more broadly at both GHG emission and Social Cost of Carbon, much of the majority’s criticism simply reflects the fact that consideration of climate change in our pipeline reviews is difficult. I agree that consideration of climate change is difficult. That is because climate change is broader in scope and scale than other environmental impacts generally considered in our pipeline reviews. However, the nature of the issue does not relieve us of the burden of considering it, but rather makes it more important that we do so.

"I recognize that Commission consensus on the usefulness of the quantification of GHG emissions and the value of the Social Cost of Carbon in our pipeline dockets may be difficult to achieve. I myself have definitely struggled with these questions over the past few years. I appreciate that the Commission has tried to be responsive to increasing comments in our pipeline dockets on GHG emissions and climate change by disclosing progressively more information in our NEPA documents and orders on GHG upstream and downstream emissions.13 I have strongly supported our doing so. However, we have now had a pipeline certificate vacated for failure to fully consider GHG emissions and Social Cost of Carbon, so we must more squarely address them. Since downstream GHG impacts have been established as an indirect impact of the SMP Project, we must consider them in making a public interest determination, however difficult that may be.

"Finally, I believe that the best way to address climate change and the Social Cost of Carbon in pipeline dockets would be for the Commission to develop a more complete record on costs and benefits of the proposed project, including more information on the need for a project, the likely end-uses of the transported gas, and the alternatives. Commissioner Glick states the following in his dissent of the order, “The Commission should not fear adding transparency to its decision-making process. Rather, we should embrace the opportunity to disclose the effects which may not always be adverse.” I agree. Such increased openness will enhance public confidence in the Commission’s natural gas pipeline certification decision-making process. I am hopeful that the recently announced generic proceeding on pipeline review will allow the Commission and its stakeholders to consider all these issues in a meaningful and comprehensive way.

"For all of these reasons, I respectfully dissent in part."

 

• 11 Florida Southeast Connection, LLC, 162 FERC ¶ 61,233 (2018).
• 22 SEIS at 3-4 (identifying four power plants as end-use customers of the SMP Project volumes: the new Florida Power and Light Company (FPL) Okeechobee Clean Energy Center; the Duke Energy Citrus County Combined Cycle Plant; and both the existing FPL Martin County Power Plant and Rivera Beach Clean Energy Center).
• 33 Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017) (Sierra Club).
• 44 Sierra Club, 867 F.3d at 1374.
• 55 40 C.F.R. § 1508.8(b) (2017) (Indirect impacts are “caused by the action and are later in time or farther removed in distance, bust still are reasonably foreseeable.” Indirect impacts “may include growth inducing effects and other effects related to induced changes in the pattern of land use, population density or growth rate, and related effects on air and water and other natural systems, including ecosystems.”).
• 66 83 Fed. Reg. 6172.
• 77 SEIS at 4.
• 88 162 FERC ¶ 61,233 at P 27.
• 99 While Florida does not have a statewide carbon reduction target, 22 states do, which could be a relevant basis of comparison in pipeline dockets. Further, if the United States were to establish a national carbon reduction policy or rejoin an international carbon reduction agreement, those targets could be relevant to our analysis. See https://www.usclimatealliance.org/ and https://www.c2es.org/document/greenhouse-gas-emissions-targets/
• 1010 40 C.F.R. § 1502.23 (2017) (Cost-benefit analysis).
• 1111 https://www/epa.gov/sites/production/files/2016-12/documents/social_cost_of_carbon_fact_sheet.pdf
• 1212 162 FERC ¶ 61,233 at PP 37-38.
• 1313 See, e.g., Constitution Pipeline Company, LLC, 154 FERC 61,046 (2016); Nexus Gas Transmission, LLC, 160 FERC ¶ 61,022 (2017); PennEast Pipeline Company, LLC, 162 FERC ¶ 61,053 (2017); and Columbia Gas Transmission, LLC, 161 FERC ¶ 61,314 (2017).