Commissioner James Danly Statement
May 19, 2022
Docket No. CP21-197-000
I concur in the issuance of a Natural Gas Act (NGA) section 7(c)[1] certificate of public convenience and necessity to Kern River Gas Transmission Company (Kern River), authorizing the construction and operation of the Delta Lateral Project[2] because the project is required by the public convenience and necessity. I write separately to make a handful of points.
First, although I agree that the Commission must act “in accordance with our . . . statutory duties,”[3] it is necessary to take a moment to explain the scope of the public convenience and necessity standard. The Supreme Court has found that NGA section “7(e) requires the Commission to evaluate all factors bearing on the public interest.”[4] This obligation, however, is not unlimited in scope and this requirement cannot be read in a vacuum. 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.”[5] We must then turn to the purpose of the NGA, which the Supreme Court has instructed us is “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”[6] To the extent to which any of the Commission’s recent or future certificate issuances attempt to expand the subjects considered in the Commission’s balancing under the public convenience and necessity standard, as contemplated in the now-draft Updated Certificate Policy Statement,[7] I reiterate my view that any balancing regime the Commission employs must “take meaning” from the purpose of the NGA.
Second, I would like to take a moment to address the Commission’s assertion that “the emissions from the downstream combustion of the gas transported by the project are reasonably foreseeable emissions.”[8] I recognize that the Commission’s determination is based on the U.S. Court of Appeals for the District of Columbia Circuit’s decision in Sierra Club v. FERC (Sabal Trail).[9] I would be remiss, however, if I did not point out that both the partial dissenting statement in Sabal Trail[10] and another case from the U.S. Court of Appeals for the Eleventh Circuit cast serious doubt on Sabal Trail’s holding.[11] Sabal Trail is also in obvious conflict with the Supreme Court’s holding in Public Citizen.[12]
Third, as I have explained in recently-issued certificate orders,[13] while not fatal to the durability of the order, I would have explicitly repudiated Northern Natural Gas Company[14] and reaffirmed the Commission’s prior position that “[w]ithout an accepted methodology, the Commission cannot make a finding whether a particular quantity of greenhouse gas [(GHG)] emissions poses a significant impact on the environment, whether directly or cumulatively with other sources, and how that impact would contribute to climate change.”[15] This is because, as the Commission has stated, it is unable to connect a particular project’s GHG emissions to discrete, physical effects on the environment.[16] The Council on Environmental Quality (CEQ) has found similarly.[17] Moreover, 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.[18] And the Commission’s recent attempts to do so, absent the expertise to make such a determination, have amounted to little more than picking arbitrary numbers.[19]
By now stating in our certificate orders that “[t]he Commission is not herein characterizing these emissions as significant or insignificant because we are conducting a generic proceeding to determine whether and how the Commission will conduct significance determinations going forward,”[20] the Commission has effectively preserved its ability to expand its use of the flawed “eyeball” test, possibly with a new number picked as the threshold. Perhaps, the number picked will be 165,000 metric tons per year of GHG emissions.[21] Perhaps higher.[22] Or perhaps lower. There is no way of knowing. But we have learned that if a new number is to be picked to serve as a significance threshold for GHG emissions, that number will be based solely on the whim of a majority of commissioners. Regardless, such action is neither within our authority[23] nor can it be considered reasoned decision making.[24]
In response to exhortations that the Commission employ “common sense”[25] when discharging its NEPA obligations—I absolutely agree. But I am bewildered by this plea in the face of the Chairman’s direction to prepare a lengthy and expensive Environmental Impact Statement (EIS), causing unnecessary delay for a project whose climate impacts, according to my colleagues, “cannot be deemed significant under any framework.”[26] No commissioner would be happier to see the reinvigoration of NEPA’s rule of reason than I.
Fourth, regarding the inclusion of a calculation of the Social Cost of Carbon from the project’s emissions,[27] the Commission has provided extensive discussion on why the use of the Social Cost of Carbon is not appropriate in project-level NEPA review, and why it cannot meaningfully inform the Commission’s decisions on natural gas infrastructure projects under the NGA.[28] Nothing can be gleaned from the numbers calculated by Commission staff and included in today’s order. Moreover, because the Social Cost of Carbon was not developed for project-level review, its use is not required for the evaluation of impacts under section 1502.21 of the CEQ’s regulations.[29]
I also observe that in the project need section, the Commission discusses the purported end use of the gas transported by the project, stating that “Intermountain Power Agency will use the gas transported on the project to generate electricity . . . .”[30] I point this out merely because the discussion of end use in the project need section has been included in several recent certificate orders. This inclusion perhaps gestures in the direction of the now-draft Updated Certificate Policy Statement in which the Commission wishes to afford itself the discretion to deny a section 7 application if applicants fail to provide end use information.[31]
Finally, the natural gas industry has seen tremendous uncertainty due to several recent Commission actions: its establishment of the “eyeball test,”[32] its reopening of a final non-appealable certificate order,[33] the preparation of EISs where Environmental Assessments had long sufficed, and the establishment of a significance threshold in the Interim GHG Policy Statement,[34] which has since wisely been converted to a draft policy statement. I fear that there is yet more uncertainty to come with CEQ’s new NEPA regulations taking effect tomorrow, May 20, 2022.[35] Although it is not yet clear how the Commission will apply the new regulations to currently pending projects where environmental documents have already been prepared, should the Commission decide to prepare supplemental environmental documents, or receive guidance from CEQ to do so, project sponsors will likely experience even more delay.
For these reasons, I respectfully concur in the judgment.
[1] 15 U.S.C. § 717f(c).
[2] See Kern River Gas Transmission Co., 179 FERC ¶ 61,121 (2022) (Kern River).
[3] Id. P 39 n.66 (“While the Commission is not one of the specified agencies in Executive Order 12898, 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. § 717f; 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.).
[4] Atl. Ref. Co. v. Pub. Serv. Comm’n of N.Y., 360 U.S. 378, 391 (1959).
[5] NAACP v. FPC, 425 U.S. 662, 669 (1976) (NAACP).
[6] Id. at 669-70; accord Myersville Citizens for a Rural Cmty., 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.
[7] Certification of New Interstate Nat. Gas Facilities, 178 FERC ¶ 61,107 (2022) (Updated Certificate Policy Statement); 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 Consideration of Greenhouse Gas Emissions in Nat. Gas Infrastructure Project Revs., 178 FERC ¶ 61,108 (2022) (Interim GHG Policy Statement), to “draft” policy statements).
[8] Kern River, 179 FERC ¶ 61,121 at P 30.
[9] 867 F.3d 1357, 1375 (D.C. Cir. 2017).
[10] See id. at 1380-83 (Brown, J., concurring in part and dissenting in part).
[11] See Ctr. for Biological Diversity v. U.S. Army Corps of Eng’rs, 941 F.3d 1288, 1299-1300 (11th Cir. 2019) (referring to Sabal Trail as “questionable”).
[12] See Dep’t of Transp. v. Pub. Citizen, 541 U.S. 752, 767 (2004) (“[The National Environmental Policy Act (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) (Public Citizen).
[13] See, e.g., Columbia Gulf Transmission, LLC, 178 FERC ¶ 61,198 (2022) (Danly, Comm’r, concurring in the judgment at PP 2-4) (Columbia Gulf).
[14] N. Nat. Gas Co., 174 FERC ¶ 61,189 (2021) (Northern Natural). In Northern Natural, a majority of my colleagues established what has been referred to (by some) as the “eyeball” test. See Catherine Morehouse, Glick, Danly spar over gas pipeline reviews as FERC considers project’s climate impacts for first time, Util. Dive. Mar. 19, 2021, https://www.utilitydive.com/news/glick-danly-spar-over-gas-pipeline-reviews-as-ferc-considers-projects-cli/597016/ (“‘We essentially used the eyeball test,’ [Chairman Glick] said, adding that based on that analysis, ‘it didn’t seem significant in terms of the impact of those emissions on climate change.’”).
[15] Dominion Transmission, Inc., 163 FERC ¶ 61,128, at P 67 (2018) (footnote omitted).
[16] See, e.g., Nat’l Fuel Gas Supply Corp., 158 FERC ¶ 61,145, at P 188 (2017).
[17] See CEQ, Draft NEPA Guidance on Consideration of the Effects of Climate Change and Greenhouse Gas Emissions, at 3 (Feb. 18, 2010), https://obamawhitehouse.archives.gov/sites/default/files/microsites/ceq/20100218-nepa-consideration-effects-ghg-draft-guidance.pdf (“it is not currently useful for the NEPA analysis to attempt to link specific climatological changes, or the environmental impacts thereof, to the particular project or emissions, as such direct linkage is difficult to isolate and to understand.”).
[18] See, e.g., Mountain Valley Pipeline, LLC, 163 FERC ¶ 61,197, at P 292 (2018).
[19] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 at PP 79-81 (establishing a significance threshold of 100,000 metric tons per year of CO2e); id. (Danly, Comm’r, dissenting at PP 32-36) (explaining why the majority’s presumptive significance threshold is illogical); see also Northern Natural, 174 FERC ¶ 61,189 (Danly, Comm’r, concurring in part and dissenting in part at P 16) (comparing the Northern Natural test to “posting a speed limit sign with a question mark instead of a number, leaving it to the police officer to decide arbitrarily whether you were speeding”).
[20] Kern River, 179 FERC ¶ 61,121 at P 30.
[21] See Columbia Gulf, 178 FERC ¶ 61,198 (Glick, Chairman, concurring at P 5) (“I would have preferred to apply Northern Natural here and would have concluded based on evidence in the record that the relevant 165,000 metric tons per year of GHG emissions are not significant.”) (footnote omitted); Tenn. Gas Pipeline Co., L.L.C., 178 FERC ¶ 61,199 (2022) (Glick, Chairman, concurring at P 5) (“I would have preferred to apply Northern Natural here and would have concluded based on evidence in the record that the relevant 145,000 metric tons per year of GHG emissions are not significant.”) (footnote omitted) (Tennessee Gas).
[22] See Columbia Gulf, 178 FERC ¶ 61,198 (Glick, Chairman, concurring at P 5 n.14) (“I recognize the now-draft GHG policy statement proposes 100,000 metric tons as a threshold over which a project’s GHG emissions would be presumed significant. In my view, that is a deliberately conservative number intended to ensure that the Commission did not lead projects developers down the path of an environmental assessment, only to subsequently change course and require an environmental impact statement in the event that the Commission were to establish a lower threshold in a final GHG policy statement than it did in the then-interim, now-draft policy statement. I remain open to reviewing the comments submitted in response to that draft statement, as well as guidance we may receive from other federal agencies, in considering what threshold would be appropriate in a final policy statement.”) (citation omitted) (emphasis added); Tennessee Gas, 178 FERC ¶ 61,199 (Glick, Chairman, concurring at P 5 n.13) (same).
[23] See Atl. City Elec. Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2002) (“As a federal agency, FERC is a ‘creature of statute,’ having ‘no constitutional or common law existence or authority, but only those authorities conferred upon it by Congress.’”) (quoting Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001)) (emphasis in Atl. City Elec. Co.); see Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988) (“It is axiomatic that an administrative agency’s power to promulgate legislative regulations is limited to the authority delegated by Congress.”); see also Senate Energy & Nat. Res. Committee, Full Committee Hearing To Review FERC’s Recent Guidance On Natural Gas Pipelines, https://www.energy.senate.gov/hearings/2022/3/full-committee-hearing-to-review-ferc-s-recent-guidance-on-natural-gas-pipelines, at 00:58:30 (Mar. 3, 2022) (questioning by Chairman Manchin regarding the recent policy statements: “The Commission, you all acknowledge, that . . . no federal agency, including this Commission has established a threshold for determining what level of project-induced greenhouse gas emissions is significant. Why do you all think that FERC, whose primary purpose is to regulate efficient and reliable energy, should be the first agency, the first to set such a standard rather than the environmental agencies?”); see generally Interim GHG Policy Statement, 178 FERC ¶ 61,108 (Danly, Comm’r, dissenting).
[24] The Commission is authorized to make a “‘rational legislative-type judgment’” but may not “pluck a number out of thin air when it promulgates rules.” WJG Tel. Co., Inc. v. FCC, 675 F.2d 386, 388-89 (D.C. Cir. 1982) (quoting FCC v. Nat’l Citizens Comm. for Broad., 436 U.S. 775, 814 (1978)); see also LeMoyne-Owen Coll. v. NLRB, 357 F.3d 55, 61 (D.C. Cir. 2004) (“In the absence of an explanation, the ‘totality of the circumstances’ can become simply a cloak for agency whim—or worse.”) (citation omitted).
[25] Kern River, 179 FERC ¶ 61,121 (Glick, Chairman & Clements, Comm’r, concurring at P 2).
[26] Id. (Glick, Chairman & Clements, Comm’r, concurring at P 1) (emphasis in original).
[27] See Kern River, 179 FERC ¶ 61,121 at P 37.
[28] See, e.g., 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.”).
[29] 40 C.F.R. § 1502.21(c). This reasoning is consistent with Florida Southeast Connection, LLC where the Commission stated, “[a]nd we do not dispute that [the Social Cost of Carbon] is generally accepted in the scientific community and can play an important role in different contexts, such as rulemaking proceedings.” 164 FERC ¶ 61,099, at P 35 (2018) (footnote omitted) (emphasis added).
[30] See Kern River, 179 FERC ¶ 61,121 at P 11.
[31] See Updated Certificate Policy Statement, 178 FERC ¶ 61,107 at P 55 (“To the extent applicants do not have information on the end use of the gas, they are encouraged to work with their prospective shippers to obtain it. The absence of this information may prevent an applicant from meeting its burden to demonstrate that a project is needed.”).
[32] See infra n.14.
[33] See Algonquin Gas Transmission, LLC, 174 FERC ¶ 61,126 (2021) (Danly, Comm’r, dissenting).
[34] See Interim GHG Policy Statement, 178 FERC ¶ 61,108 at PP 79-81.
[35] See National Environmental Policy Act Implementing Regulations Revisions, 87 Fed. Reg. 23,543 (Apr. 20, 2022) (to be codified at 40 C.F.R. pts. 1502, 1507, and 1508).