Notice2022-04148
Certification of New Interstate Natural Gas Facilities
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 1, 2022
Issuing agencies
Energy DepartmentFederal Energy Regulatory Commission
Abstract
This Updated Policy Statement describes how the Commission will evaluate all factors bearing on the public interest in determining whether a new interstate natural gas transportation project is required by the public convenience and necessity under the Natural Gas Act.
Full Text
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[Federal Register Volume 87, Number 40 (Tuesday, March 1, 2022)]
[Notices]
[Pages 11548-11580]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-04148]
[[Page 11547]]
Vol. 87
Tuesday,
No. 40
March 1, 2022
Part III
Department of Energy
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Federal Energy Regulatory Commission
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Certification of New Interstate Natural Gas Facilities; Notice
Federal Register / Vol. 87 , No. 40 / Tuesday, March 1, 2022 /
Notices
[[Page 11548]]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
[Docket No. PL18-1-000]
Certification of New Interstate Natural Gas Facilities
AGENCY: Federal Energy Regulatory Commission, Department of Energy
(DOE).
ACTION: Updated Policy Statement on Certification of New Interstate
Natural Gas Facilities.
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SUMMARY: This Updated Policy Statement describes how the Commission
will evaluate all factors bearing on the public interest in determining
whether a new interstate natural gas transportation project is required
by the public convenience and necessity under the Natural Gas Act.
DATES: Comments that pertain to the Paperwork Reduction Act are due May
2, 2022.
FOR FURTHER INFORMATION CONTACT:
Paige Espy (Legal Information), Office of the General Counsel, 888
First Street NE, Washington, DC 20426, (202) 502-6698,
<a href="/cdn-cgi/l/email-protection#1141707876743f5462616851777463723f767e67"><span class="__cf_email__" data-cfemail="8fdfeee6e8eaa1cafcfff6cfe9eafdeca1e8e0f9">[email protected]</span></a>
Brandon Cherry (Technical Information), Office of Energy Projects,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, (202) 502-8328, <a href="/cdn-cgi/l/email-protection#2d6f5f4c43494243036e45485f5f546d4b485f4e034a425b"><span class="__cf_email__" data-cfemail="4d0f3f2c23292223630e25283f3f340d2b283f2e632a223b">[email protected]</span></a>
SUPPLEMENTARY INFORMATION:
1. On April 19, 2018, and February 18, 2021, the Commission issued
Notices of Inquiry (NOI) \1\ to help the Commission explore whether,
and if so how, it should revise the approach established by its
currently effective policy statement on the certification of new
interstate natural gas transportation facilities (1999 Policy
Statement) \2\ to determine whether a proposed natural gas project ``is
or will be required by the present or future public convenience and
necessity,'' as that standard is established in section 7 of the
Natural Gas Act (NGA).\3\
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\1\ Certification of New Interstate Natural Gas Facilities, 83
FR 18020 (Apr. 25, 2018), 163 FERC ] 61,042 (2018); Certification of
New Interstate Natural Gas Facilities, 86 FR 11268 (Feb. 24, 2021),
174 FERC ] 61,125 (2021).
\2\ Certification of New Interstate Natural Gas Pipeline
Facilities, 88 FERC ] 61,227 (1999), clarified, 90 FERC ] 61,128,
further clarified, 92 FERC ] 61,094 (2000) (1999 Policy Statement).
\3\ 15 U.S.C. 717f(e).
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2. Based on the comments received in this proceeding and the
significant changes that have occurred since issuance of the 1999
Policy Statement, and in order to provide stakeholders with more
clarity on the Commission's decision-making process, we are issuing
this Updated Certificate Policy Statement (Updated Policy Statement).
3. This Updated Policy Statement does not establish binding rules
and is intended to explain how the Commission will consider
applications to construct new interstate natural gas transportation
facilities.
I. Background
A. Statutory Authority and Obligations
4. Section 7 of the NGA authorizes the Commission to issue
certificates of public convenience and necessity for the construction
and operation of facilities transporting natural gas in interstate
commerce.\4\ Under section 7(e), the Commission shall issue a
certificate to any qualified applicant upon finding that the
construction and operation of a proposed project ``is or will be
required by the present or future public convenience and necessity.''
\5\ The public convenience and necessity standard encompasses all
factors bearing on the public interest.\6\
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\4\ Id. 717f.
\5\ Id. 717f(e).
\6\ Atl. Ref. Co. v. Pub. Serv. Comm'n of N.Y., 360 U.S. 378,
391 (1959) (``This is not to say that rates are the only factor
bearing on the public convenience and necessity, for [section] 7(e)
requires the Commission to evaluate all factors bearing on the
public interest.'').
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5. The NGA authorizes the Commission to attach to a certificate
``such reasonable terms and conditions as the public convenience and
necessity may require.'' \7\ The Commission can also deny an
application for a certificate if a balancing of all public interest
factors weighs against authorization of the proposed project.\8\ If an
applicant receives a certificate from the Commission, section 7(h) of
the NGA authorizes the certificate holder to acquire the property
rights necessary to construct and operate its project by use of eminent
domain if it cannot reach an agreement with a landowner.\9\
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\7\ 15 U.S.C. 717f(e).
\8\ See, e.g., FPC v. Transcon. Gas Pipe Line Corp., 365 U.S. 1,
17 (1961) (the Commission ``can only exercise a veto power over
proposed transportation . . . when a balance of all the
circumstances weighs against certification'').
\9\ 15 U.S.C. 717f(h).
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6. The Commission's consideration of an application generally
triggers environmental review under the National Environmental Policy
Act of 1969 (NEPA).\10\ NEPA and its implementing regulations require
that, before taking or authorizing a major Federal action that may
significantly affect the quality of the human environment, Federal
agencies take a ``hard look'' at the environmental consequences of the
proposed action and disclose their analyses to the public.\11\ NEPA
also requires that agencies consider whether there are steps that could
be taken to mitigate any adverse environmental consequences.\12\ While
NEPA is a procedural statute and does not require an agency to reject a
proposed project based on its adverse effects or to take action to
mitigate those effects,\13\ an agency may require mitigation measures
as a condition of its approval under the NGA,\14\ or withhold approval
based on significant adverse effects.\15\
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\10\ 42 U.S.C. 4321-4370j.
\11\ Id. 4332(2)(C); 40 CFR 1500.1-1508.1; Baltimore Gas & Elec.
Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 97 (1983)
(discussing the twin aims of NEPA--to consider environmental impacts
and to disclose the agency's consideration to the public).
\12\ Robertson v. Methow Valley Citizens Council, 490 U.S. 332,
351 (1989) (``To be sure, one important ingredient of an
[environmental impact statement] is the discussion of steps that can
be taken to mitigate adverse environmental consequences.'').
\13\ Id. at 352 (``There is a fundamental distinction, however,
between a requirement that mitigation be discussed in sufficient
detail to ensure that environmental consequences have been fairly
evaluated, on the one hand, and a substantive requirement that a
complete mitigation plan be actually formulated and adopted, on the
other.''); see also Baltimore Gas & Elec. Co., 462 U.S. at 97
(citing Stryckers' Bay Neighborhood Council v. Karlen, 444 U.S. 223,
227 (1980)).
\14\ Final Guidance for Federal Departments and Agencies on the
Appropriate Use of Mitigation and Monitoring and Clarifying the
Appropriate use of Mitigated Findings of No Significant Impact, 76
FR 3843, 3848 (Jan. 21, 2011).
\15\ See, e.g., Sierra Club v. FERC, 867 F.3d 1357, 1373 (D.C.
Cir. 2017) (Sabal Trail) (explaining that the Commission may ``deny
a pipeline certificate on the ground that the pipeline would be too
harmful to the environment'').
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B. Historical Context and the 1999 Certificate Policy Statement
7. From the enactment of the NGA in 1938 to the 1990s, as a result
of statutory and regulatory revisions, the natural gas industry evolved
away from a system of limited competition among vertically integrated
companies selling bundled commodity and transportation services at
Commission-regulated prices to one where pipelines provide open-access
transportation of gas supplies purchased pursuant to non-Commission
regulated agreements between producers and other parties. Consequently,
consumers benefitted from competition among non-pipeline entities in an
unregulated commodity market and from competition among pipeline
companies providing open-access, unbundled transportation services at
Commission-regulated rates or, if authorized under certain
circumstances, market-based rates.
[[Page 11549]]
8. At the same time that natural gas commodity and transportation
markets were becoming more competitive, the 1990s saw significant
growth in natural gas consumption in the industrial and electric
generation sectors. The resultant expansion of the pipeline system to
meet this demand raised issues as to who should bear the costs of new
construction. Before the Commission adopted the 1999 Policy Statement,
the Commission's pricing policy for new construction generally allowed
for the costs of expansion projects to be rolled into a pipeline
company's existing system costs to derive rolled-in rates in a future
rate case under section 4 of the NGA.\16\ All shippers bore some burden
of the expansion project's cost, regardless of whether they would
benefit from the project. Local distribution companies (LDC) and other
parties believed that this pricing policy sent the wrong price signals
by masking the real costs of an expansion project and could result in
overbuilding and subsidization of expansion by a pipeline's existing
shippers.
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\16\ Pricing Policy for New and Existing Facilities Constructed
by Interstate Natural Gas Pipelines, 71 FERC ] 61,241 (1995), order
on reh'g, 75 FERC ] 61,105 (1996). Under this pricing policy,
expansion projects received a determination for rolled-in pricing
upon a showing that the new costs would not increase existing rates
by more than five percent.
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9. In response to these and other concerns, in 1998, the Commission
issued a Notice of Proposed Rulemaking \17\ and an NOI \18\ to explore
issues related to its policies on the certification and pricing of new
pipeline projects. Based on the information received from stakeholders
in response to these notices, the Commission issued the 1999 Policy
Statement ``to foster competitive markets, protect captive customers,
and avoid unnecessary environmental and community impacts while serving
increasing demands for natural gas.'' \19\ These objectives were
realized primarily by a shift from a presumption of rolled-in pricing
to a presumption of incremental pricing.\20\ Under incremental pricing,
existing customers using only existing facilities do not subsidize the
cost of constructing and operating new projects.\21\
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\17\ Regulation of Short-Term Natural Gas Transportation
Services, Notice of Proposed Rulemaking, 63 FR 42,982 (July 29,
1998), FERC Stats. & Regs. ] 32,533 (1998) (cross-referenced at 84
FERC ] 61,085).
\18\ Regulation of Interstate Natural Gas Transportation
Services, NOI, 63 FR 42974 (Aug. 9, 1998), FERC Stats. & Regs. ]
35,533 (1998) (cross-referenced at 84 FERC ] 61,087).
\19\ 1999 Policy Statement, 88 FERC at 61,743.
\20\ Although incremental pricing was presumed, an applicant
could demonstrate that a proposed project qualified for a pre-
determination of rolled-in rate treatment through showing that
inexpensive expansibility was made possible because of earlier,
costly construction or that the project was designed to improve
existing service for existing customers. Id. at 61,746 and n.12.
\21\ Id. at 61,746.
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10. Pursuant to the 1999 Policy Statement, when reviewing
applications to construct new interstate transportation facilities the
Commission would first determine whether a threshold requirement of no
financial subsidization from existing customers was met. If so, the
Commission would next consider whether the applicant eliminated or
minimized any residual adverse effects the project might have on: (1)
The applicant's existing customers; (2) existing pipelines in the
market and their captive customers; and (3) landowners and communities
affected by the proposed project.\22\ Any residual adverse effects
would be balanced against the anticipated benefits from the
project.\23\ The Commission allowed an applicant to rely on a variety
of factors to demonstrate that its proposed project was needed,\24\
but, in practice, applicants generally elected to submit, and the
Commission accepted, precedent agreements with prospective customers
for long-term firm service as the principal factor in demonstrating
project need.
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\22\ Id. at 61,745.
\23\ Id. at 61,748.
\24\ Id. at 61,747.
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11. The 1999 Policy Statement introduced a sliding scale approach
to balance public benefits with adverse effects, where the ``more
interests adversely affected or the more adverse impact a project would
have on a particular interest, the greater the showing of public
benefits from the project required to balance the adverse impact.''
\25\ The 1999 Policy Statement provided that, if the Commission found
that project benefits outweighed adverse impacts on economic interests,
then the Commission would proceed to consider the environmental impacts
of the project.\26\
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\25\ Id. at 61,749.
\26\ Id. at 61,745-46. While the Commission only moved to the
stage of balancing environmental impacts and other considerations if
a proposed project passed this economic test established by the 1999
Policy Statement, Commission staff would begin review of the
environmental impacts following the filing of an application. If a
project did not pass this economic test, it could be rejected
without further consideration of environmental factors.
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C. Developments After Issuance of the 1999 Certificate Policy Statement
12. Much has changed since the Commission issued the 1999 Policy
Statement. In the last decade, increases in both domestic and
international demand for natural gas produced in the United States,
combined with the available supply of competitively-priced gas from
shale reserves, have reduced prices and price volatility and have
resulted in more proposals for natural gas transportation and export
projects.\27\ Much of the increased production is attributable to the
development of the Marcellus and Utica shale formations in
Pennsylvania, West Virginia, Ohio, and New York; shale formations in
the Permian Basin in West Texas and Eastern New Mexico; Eagle Ford
Shale in South Texas; and Bakken Shale Formation in North Dakota, among
others; as well as associated new extraction technologies.
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\27\ In the early 2000s, there were a number of proposals for
natural gas import projects. However, as natural gas supplies
increased and prices decreased, the Commission began to see more
proposals for natural gas export projects.
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13. Contracting patterns are changing significantly as a result of
this supply growth. In the past, LDCs contracted for a large percentage
of interstate pipeline capacity, obtaining supplies from the production
area for their customers. Increasingly, however, LDCs are purchasing
gas supplies further downstream at market area pooling points or at
their city gates as other parties increasingly contract for pipeline
capacity. Natural gas producers are now contracting for a significant
amount of firm pipeline capacity on expansion projects in an effort to
provide a secured commercial outlet for their gas.
14. Over the past decade, there has been greater interest and
participation by affected landowners and communities, Tribes,
environmental organizations, and others in natural gas project
proceedings. Part of this may be attributable to the increase in
proposals for new natural gas infrastructure in more densely populated
areas of the eastern half of the nation. These stakeholders have raised
various concerns with, among other things, the use of eminent domain,
the need for new projects, and the environmental impacts of project
construction and operation, including impacts on climate change and
environmental justice communities.
15. The Commission's consideration of climate change and greenhouse
gas emissions (GHG) has also evolved since issuance of the 1999 Policy
Statement. In the last decade, the Commission began including estimates
of GHG emissions from project construction (e.g., tailpipe emissions
from construction equipment) and operation (e.g., fuel combustion at
compressor stations and gas venting and leaks) in its
[[Page 11550]]
NEPA documents.\28\ Then, starting in late 2016, the Commission began
to estimate GHG emissions from downstream combustion and upstream
production.\29\ In 2018, however, the Commission reversed this
practice,\30\ resulting in a number of judicial decisions finding fault
with the Commission's approach.\31\ Concurrent with this Updated Policy
Statement, the Commission is issuing a new policy statement to explain
how it will assess project impacts on climate change in its NEPA and
NGA reviews going forward (GHG Policy Statement).\32\
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\28\ See, e.g., Environmental Assessment for the Philadelphia
Lateral Expansion Project, Docket No. CP11-508-000, at 24 (Jan. 18,
2012) (construction emissions); Environmental Assessment for the
Minisink Compressor Project, Docket No. CP11-515-000, at 29 (Feb.
29, 2012) (operation emissions).
\29\ See, e.g., Columbia Gas Transmission, LLC, 158 FERC ]
61,046, at PP 116-120 (2017); Tex. E. Transmission, LP, 157 FERC ]
61,223, at P 41 (2016), reh'g granted, 161 FERC ] 61,226 (2017).
\30\ Dominion Transmission, Inc., 163 FERC ] 61,128 (2018), pet.
dismissed, Otsego 2000 v. FERC, 767 F.App'x 19 (D.C. Cir. 2019)
(unpublished opinion).
\31\ See infra P 70.
\32\ Consideration of Greenhouse Gas Emissions in Natural Gas
Infrastructure Project Reviews, 178 FERC ] 61,108 (2022) (GHG Policy
Statement).
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16. Another development since issuance of the 1999 Policy Statement
is an increasing recognition of the need for Federal agencies to focus
on environmental justice and equity. In 1994, under Executive Order
12898, agencies were directed to identify and address
``disproportionately high and adverse human health or environmental
effects'' of their actions on minority and low-income populations
(i.e., environmental justice communities).\33\ In 2021, President Biden
issued two executive orders to renew and expand upon this directive.
Specifically, Executive Order 13985, issued on January 20, 2021,
requires agencies to conduct Equity Assessments to identify and remove
barriers to underserved communities and ``to increase coordination,
communication, and engagement with community-based organizations and
civil rights organizations.'' \34\ And Executive Order 14008, issued on
January 27, 2021, directs agencies to develop ``programs, policies, and
activities to address the disproportionately high and adverse human
health, environmental, climate-related and other cumulative impacts on
disadvantaged communities, as well as the accompanying economic
challenges of such impacts.'' \35\
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\33\ E.O. 12898, Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations, 59 FR
7629, at 7629, 7632 (Feb. 11, 1994).
\34\ E.O. 13985, Advancing Racial Equity and Support for
Underserved Communities Through the Federal Government, 86 FR 7009,
7010-11.
\35\ E.O. 14008, Tackling the Climate Crisis at Home and Abroad,
86 FR 7619, 7629; see also The White House, Fact Sheet: President
Biden Takes Executive Actions to Tackle the Climate Crisis at Home
and Abroad, Create Jobs, and Restore Scientific Integrity Across
Federal Government (2021).
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II. Notices of Inquiry and Comments
17. As noted above, on April 19, 2018, the Commission issued an NOI
(2018 NOI) seeking information and stakeholder perspectives to help the
Commission explore whether, and if so how, it should revise the
approach established by the 1999 Policy Statement. The Commission
identified four general areas for examination in the 2018 NOI: (1) The
reliance on precedent agreements to demonstrate need for a proposed
project; (2) the potential exercise of eminent domain and landowner
interests; (3) the Commission's evaluation of alternatives and
environmental effects under NEPA and the NGA; and (4) the efficiency
and effectiveness of the Commission's certificate processes. In
response to the 2018 NOI, the Commission received more than 3,000
comments from a diverse range of stakeholders.
18. On February 18, 2021, the Commission issued another NOI (2021
NOI) seeking to build upon the existing record established by the 2018
NOI. The 2021 NOI noted that a number of changes had occurred since the
Commission issued the 2018 NOI, including regulatory changes, the
issuance of new executive orders, and increased stakeholder interest in
certain topics. Accordingly, the 2021 NOI provided stakeholders with an
opportunity to refresh the record and provide updated information and
additional viewpoints to help the Commission assess its policy.
19. The 2021 NOI included the four general areas of examination
identified in the 2018 NOI, with modifications to the specific
questions asked, including new questions on how the Commission should
assess and consider the impacts of proposed projects on climate change.
The 2021 NOI also identified a fifth area of examination--the
Commission's identification and consideration of disproportionately
high and adverse human health or environmental effects of its programs,
policies, and activities on environmental justice communities and the
mitigation of those adverse impacts and burdens, as well as the
Commission's identification of potentially affected environmental
justice communities and measures for ensuring effective participation
by these communities in the certificate review process. In response to
the 2021 NOI, the Commission received more than 35,000 comments,
including more than 150 unique comment letters, from a diverse range of
stakeholders.
20. The comments received in response to the 2018 and 2021 NOIs are
summarized at a high level below. Comments related to GHG emissions are
summarized in the aforementioned GHG Policy Statement.\36\ The
considerable number of comments submitted in this proceeding indicates
substantial public interest in the Commission's policy for reviewing
proposed interstate natural gas facilities.
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\36\ GHG Policy Statement, 178 FERC ] 61,108.
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A. The Commission's Determination of Need
21. A wide range of commenters request that the Commission change
how it makes its public need determination. Many of these commenters
argue that the Commission should rely less on precedent agreements.\37\
Additionally, commenters request that, in assessing need, there be
greater consideration of climate change impacts,\38\ increased
transparency,\39\ and an enlarged participatory role for
stakeholders.\40\ Some commenters recommend that applicants be required
to provide specific evidence that need exists, the proposed facilities
serve that need, and the asserted need cannot be met by existing
infrastructure.\41\ In contrast, regulated companies and industry trade
organizations are nearly unanimous in their general support of the 1999
Policy Statement as it relates to the public need determination.\42\
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\37\ E.g., Public Interest Organizations (PIO) 2021 Comments at
12; Delaware Riverkeeper Network 2018 Comments at 67; Friends of the
Central Shenandoah 2018 Comments at 36-38. The PIO 2021 Comments
represent 54 entities from around the country that advocate for the
protection of environmental resources, including Natural Resources
Defense Council, Sierra Club, Public Citizen, Conservation Law
Foundation, and Southern Environmental Law Center.
\38\ See, e.g., Environmental Protection Agency (EPA) 2021
Comments at 1-2.
\39\ E.g., New Jersey Conservation Foundation, Sabin Center for
Climate Change Law, Watershed Institute, Clean Air Council,
PennFuture, and New Jersey League of Conservation Voters
(collectively, New Jersey Conservation Foundation et al.) 2021
Comments at 31-32.
\40\ E.g., Ann W. Woll 2021 Comments at 1; Jessica Greenwood
2021 Comments at 1; Rev. Betsy Sowers 2021 Comments at 1.
\41\ E.g., Environmental Defense Fund (EDF) 2021 Comments at 8-
12.
\42\ See, e.g., American Gas Association (AGA) 2021 Comments at
10-11.
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22. Several commenters argue that the public benefits recognized in
the 1999 Policy Statement are skewed, overly
[[Page 11551]]
narrow, and outdated.\43\ Additionally, some commenters recommend that
the Commission create clear guidelines for benefits like reliability
and resilience.\44\ Some commenters suggest that the Commission
consider additional factors in its benefits analysis, such as
infrastructure security and how an applicant's proposal fits with, or
advances, new Federal and State policies and goals.\45\ In contrast,
industry trade organizations generally support the Commission's
existing benefits analysis under the 1999 Policy Statement, arguing
that the Commission's responsibilities under the NGA have not changed,
and, thus, any changes to the Commission's review of public benefits
should not impede those responsibilities.\46\ However, some regulated
companies recommend that the Commission more heavily weigh certain
benefits, such as reliability and resilience, in light of recent
extreme cold weather events and ransomware attacks.\47\
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\43\ See, e.g., Delaware Riverkeeper Network & Berks Gas Truth
2021 Comments at 4.
\44\ E.g., EDF 2021 Comments at 18.
\45\ See, e.g., New Jersey Division of Rate Counsel 2021
Comments at 4-8.
\46\ See, e.g., Natural Gas Supply Association (NGSA) 2021
Comments at 23.
\47\ Iroquois Gas Transmission System, L.P. (Iroquois) 2021
Comments at 10-11.
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23. Regarding what evidence the Commission should examine to
determine project need, many non-governmental organizations (NGO),
individual commenters, and other entities argue that the Commission
should analyze factors beyond precedent agreements, such as future
markets, opportunity costs, Federal and State public policies, and
effects on competition.\48\ NGOs request that the Commission take a
more ``holistic'' approach and assess proposed projects in conjunction
with other projects that are designed to serve the same market, serve
similar markets, or pass through the same region,\49\ and that there be
increased coordination with State agencies, including allowing State
regulators to review and approve precedent agreements prior to the
Commission making a need determination.\50\ In contrast, regulated
companies and industry trade organizations State that precedent
agreements remain powerful indicators of need, as they represent long-
term, binding contractual and financial commitments to a project and
are more objective evidence than market studies.\51\
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\48\ See, e.g., Niskanen Center, Hopewell Township, Horizons
Village Property Owners Association, Inc., and 28 affected
landowners (collectively, Niskanen Center et al.) 2021 Comments at
18; Delaware Riverkeeper Network & Berks Gas Truth 2021 Comments at
9; New Jersey Division of Rate Counsel 2021 Comments at 8-9; Carolyn
Elefant 2021 Comments at 2-3.
\49\ PIO 2018 Comments at 10. The PIO 2018 Comments represent 64
entities from around the country that advocate for the protection of
environmental resources; many of these entities also signed on to
the PIO 2021 Comments.
\50\ Delaware Riverkeeper Network & Berks Gas Truth 2021
Comments at 18.
\51\ See, e.g., WBI Energy Transmission, Inc. (WBI Energy) 2021
Comments at 3; National Fuel Gas Supply Corporation (National Fuel)
2021 Comments at 9; Energy Transfer LP 2021 Comments at 4-5;
Interstate Natural Gas Association of America (INGAA) 2021 Comments
at 17-19; Boardwalk Pipeline Partners LP (Boardwalk) 2021 Comments
at 28.
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24. Several commenters recommend that when applicants provide
precedent agreements with affiliates as evidence of need, the
Commission look beyond those agreements, given that companies with
common profit interests might have incentives to inflate costs which
can then be passed on to captive ratepayers.\52\ Additionally, several
commenters argue that the terms of precedent agreements should be
subject to close scrutiny \53\ and that the Commission should consider
the potential for an asset to be rendered obsolete before the end of
its useful life, as well as the length of time over which an asset's
costs are recovered.\54\ In contrast, regulated companies and industry
trade organizations argue that the Commission should not distinguish
between affiliate and non-affiliate agreements, as standards of conduct
and nondiscrimination require pipeline companies to treat all customers
equitably, regardless of whether the customer is an affiliate or a non-
affiliate.\55\ These entities allege that economic risk, financial
obligation, and oversight by State and local regulators associated with
precedent agreements demonstrate that they are clear evidence of need,
regardless of whether the shipper is an affiliate.\56\
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\52\ See, e.g., Natural Resources Defense Council, Sierra Club,
Earthjustice, GreenFaith, Southern Environmental Law Center,
Conservation Law Foundation, Public Citizen, Catskill
Mountainkeeper, New Jersey Conservation Foundation, Riverkeeper,
Inc., and Acadia Center (collectively, Joint NGOs) April 2018
Comments at 2; Jim Steitz 2018 Comments at 2.
\53\ See, e.g., Friends of the Central Shenandoah 2018 Comments
at 47-49; Upstate Forever 2018 Comments at 2.
\54\ New Jersey Division of Rate Counsel 2021 Comments at 10.
\55\ See, e.g., WBI Energy 2021 Comments at 5; INGAA 2021
Comments at 19-20; DTE Energy Company 2018 Comments at 5; Iroquois
2018 Comments at 12-13.
\56\ E.g., WBI Energy 2021 Comments at 5.
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25. A wide range of commenters assert that the Commission must
consider the end use of the natural gas to be transported in its
assessment of need, even if end use could change over time.\57\ Some
commenters also note that climate change issues cannot be appropriately
addressed without a firm understanding of end use.\58\ However,
regulated companies and industry trade organizations argue against
consideration of expected end use given the practical challenges of
dynamic gas markets,\59\ the Commission's regulations prohibiting
pipelines from unduly discriminating among shippers based on end
use,\60\ and the fact that regulating end use is outside the scope of
the Commission's statutory authority.\61\
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\57\ See, e.g., Delaware Riverkeeper Network & Berks Gas Truth
2021 Comments at 29-32; Deb Evans and Rob Schaaf 2018 Comments at 3-
5.
\58\ E.g., Fore River Residents Against the Compressor Station,
Inc. (FRRACS) 2021 Comments at 2.
\59\ Enbridge Gas Pipelines (Enbridge) 2021 Comments at 46; WBI
Energy 2021 Comments at 6.
\60\ INGAA 2021 Comments at 22 (citing 18 CFR 284.7(b)).
\61\ Cheniere Energy, Inc. (Cheniere) 2018 Comments at 6.
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26. Many commenters recommend that the Commission assess need in a
regional planning context, including consideration of existing
infrastructure, in order to avoid unnecessary environmental harm,
``underutilized or stranded'' assets, and needlessly higher rates for
captive consumers.\62\ Regulated companies and industry trade
organizations, however, generally oppose the Commission using a
regional approach to review natural gas pipeline projects, asserting
that this could needlessly delay construction,\63\ the proximity of
pipeline projects does not necessarily indicate that projects serve the
same need in a region,\64\ and the open season process already serves
to ensure duplicative projects are not constructed.\65\ Also, these
entities do not support the Commission further examining whether
existing infrastructure could sufficiently meet demand.\66\
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\62\ See, e.g., EPA 2021 Comments at 1-3; New Jersey Division of
Rate Council 2018 Comments at 13-15; Friends of Central Shenandoah
2018 Comments at 57-59.
\63\ E.g., INGAA 2021 Comments at 23.
\64\ E.g., INGAA 2021 Comments at 24.
\65\ E.g., Cheniere 2018 Comments at 8.
\66\ See, e.g., Energy Transfer LP 2021 Comments at 6; Iroquois
2021 Comments at 12.
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27. Additionally, several commenters assert that the Commission
must consider future demand as facilities age, as well as national and
State decarbonization policies and targets.\67\ In contrast, regulated
companies and industry trade organizations contend that assessment of
future demand is not
[[Page 11552]]
necessary or prudent, given that sophisticated market participants
already make these calculations, and do not support the Commission
performing a comparative or future-looking analysis of energy
sources.\68\ These entities emphasize that demand for natural gas
projects will be correlated with demand for, and deployment of,
variable energy resources.\69\
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\67\ See, e.g., New Jersey Division of Rate Counsel 2021
Comments at 13-14.
\68\ See, e.g., Williams Companies, Inc. (Williams) 2021
Comments at 14; Enbridge 2021 Comments at 51; INGAA 2021 Comments at
25-26.
\69\ INGAA 2021 Comments at 25-26; Boardwalk 2021 Comments at
38.
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28. Generally, commenters are split on whether, and if so how, the
Commission should consider the economic, energy security, and social
attributes of domestic production and use of natural gas in reviewing
proposed projects. Some regulated companies State that consideration of
these factors should be limited; \70\ however, others argue that the
Commission should consider attributes such as job creation and tax
revenues.\71\ Several individuals and NGOs State that the Commission
could consider these attributes for particular projects, but that the
Commission should then also consider the costs of natural gas projects
associated with increased noise, lowered property values, lowered air
quality, a lowered tax base, and the loss of landowners' potential use
of their land.\72\ Commenters also recommend that any need analysis be
focused on the specific benefits of a proposed project rather than
hypothetical or general benefits \73\ and that the Commission assess
the magnitude or extent of both the benefits and burdens of a proposed
project, including whether the jobs created are temporary or permanent,
as well as the proportion of the jobs that will be filled by low- to
middle-income local workers.\74\
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\70\ E.g., Southern Company Services, Inc. 2021 Comments at 4.
\71\ See, e.g., Williams 2021 Comments at 11-12; Boardwalk 2021
Comments at 39-40; see also American Forest & Paper Association,
Industrial Energy Consumers of America, Process Gas Consumers Group,
and the Fertilizer Institute (collectively, American Forest & Paper
Association et al.) 2021 Comments at 17; INGAA 2021 Comments at 26-
28; AGA 2021 Comments at 32; United Association of Journeymen and
Apprentices of the Plumbing, Pipe Fitting and Sprinkler Fitting
Industry of the United States and Canada, AFL-CIO (United
Association) 2021 Comments at 26-28; NGSA 2021 Comments at 16.
\72\ See, e.g., PIO 2021 Comments at 12-13; Delaware Riverkeeper
Network & Berks Gas Truth 2021 Comments at 42; Edward Woll 2021
Comments at 2; William F. Limpert 2021 Comments at 7-8;
Massachusetts PipeLine Awareness Network (PLAN) 2021 Comments at 2;
Rev. Betsy Sowers 2021 Comments at 2.
\73\ EDF 2021 Comments at 50.
\74\ EPA 2021 Comments at 4.
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B. The Exercise of Eminent Domain and Landowner Interests
29. Many commenters suggest that the Commission adjust its approach
to considering the possible use of eminent domain. For example, some
commenters assert that eminent domain should only be an option for
projects that can guarantee domestic use or local benefit, or that the
Commission should deny certificates that would rely on eminent domain
for more than twenty percent of the proposed route.\75\ In contrast,
regulated companies and industry trade organizations State that the
Commission should maintain its current approach, as it adequately
protects landowners from the unnecessary use of eminent domain by
ensuring that only projects that are needed and that do not require
subsidization from existing customers are approved.\76\ These entities
also note that it is not possible for the Commission to reliably
estimate the amount of eminent domain that will ultimately be used
prior to issuance of a certificate.\77\
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\75\ See, e.g., Delaware Riverkeeper Network & Berks Gas Truth
2021 Comments at 43; Upstate Forever 2018 Comments at 3; Jane
Twitmyer 2018 Comments at 2; Franklin Regional Council of Gov'ts
2018 Comments at 2.
\76\ See, e.g., Boardwalk 2021 Comments at 61-63; TC Energy
Corporation 2021 Comments at 16; INGAA 2018 Comments at 56.
\77\ See, e.g., TC Energy Corporation 2021 Comments at 19;
Spectra Energy Partners LP (Spectra) 2018 Comments at 54; American
Petroleum Institute (API) 2018 Comments at 13.
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30. Some commenters assert that additional measures should be taken
to minimize the use of eminent domain for projects, including routing
pipelines in existing utility corridors when possible, requiring proof
that an applicant's efforts to negotiate with landowners have failed,
or reporting to the Commission each easement as it is agreed upon.\78\
However, many regulated companies state that additional measures to
minimize the use of eminent domain are unnecessary, as companies have
already taken steps to ensure it is used infrequently.\79\
---------------------------------------------------------------------------
\78\ See, e.g., William F. Limpert 2021 Comments at 9; Tom Russo
2021 Comments at 12; Friends of the Central Shenandoah 2018 Comments
at 67.
\79\ See, e.g., Cheniere 2021 Comments at 9-10; Kinder Morgan
Entities (Kinder Morgan) 2021 Comments at 18-20; API 2021 Comments
at 11-13; INGAA 2021 Comments at 29.
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31. Several commenters recommend that the Commission give greater
weight to the concerns of impacted landowners and communities.\80\ Some
assert that landowners have unequal bargaining power with applicants
and that the Commission should consider whether an applicant's pre-
certificate actions related to landowners demonstrate that the
applicant acted in good faith.\81\ Additionally, some commenters argue
that the Commission should expand the regulatory definition of
``affected landowners'' to ensure all impacted landowners and residents
are included in the Commission's consideration.\82\
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\80\ EDF 2021 Comments at 5; Dr. Susan F. Tierney 2018 Comments
at 8, 46-48.
\81\ See, e.g., New Jersey Conservation Foundation, Watershed
Institute, and Sierra Club 2018 Comments at 35-36; Jody McCaffree
2018 Comments at 7.
\82\ See, e.g., Sari DeCesare 2021 Comments at 1; Gary Salata
2021 Comments at 1.
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32. Multiple commenters state that it is the Commission's
responsibility to explain the certificate process to landowners and to
ensure that they have the necessary tools to fully participate.\83\
Regulated companies and industry trade organizations support the
creation of the Commission's Office of Public Participation (OPP) to
guide landowners' understanding of, and participation in, the pipeline
development and review process.\84\ Several commenters recommend that
the Commission designate certain staff as non-decisional to act as
official procedural case managers.\85\
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\83\ See, e.g., Duke Energy Corporation 2018 Comments at 45;
Upstate Forever 2018 Comments at 3.
\84\ See, e.g., Kinder Morgan 2021 Comments at 20-21; BHE
Pipeline Group 2021 Comments at 6-8; INGAA 2021 Comments at 31-32.
\85\ Tom Russo 2021 Comments at 13; American Midstream Partners
LP, Canyon Midstream Partners LLC, and Cureton Midstream LLC 2018
Comments at 7-8; Giles County and Roanoke County, Virginia 2018
Comments at 13-14.
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33. Numerous commenters also recommend changes to the Commission's
process and resources to assist landowners, including incorporating
non-traditional outreach methods to notify and engage stakeholders
early and throughout the process, improving the Commission's website
and eLibrary system, conducting public meetings and site visits focused
on landowner issues, and providing longer public comment periods.\86\
Some commenters propose that the Commission automatically grant all
affected landowners party status to project proceedings, or, at a
minimum, provide an updated step-by-step guide for landowners on how to
intervene.\87\ Industry trade organizations support longer intervention
periods for landowners,\88\ while some regulated companies argue that
the Commission
[[Page 11553]]
should limit interventions to entities that have a direct interest in a
specific project.\89\
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\86\ See, e.g., Carolyn Elefant 2021 Comments at 5-6; Niskanen
Center et al. 2021 Comments at 36-38; Kinder Morgan 2021 Comments at
22-26; Friends of Central Shenandoah 2018 Comments at 69; Spectra
2018 Comments at 5.
\87\ See Niskanen Center et al. 2021 Comments at 28; Deb Evans
and Ron Schaaf 2021 Comments at 13; Carolyn Elefant 2018 Comments at
2-3.
\88\ See INGAA 2021 Comments at 32.
\89\ See Adelphia Gateway LLC 2018 Comments at 13-14.
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34. A wide range of commenters argue that, in order to prevent
needless condemnations while routes are still subject to change and it
is uncertain if a project will be authorized, the Commission could
defer issuing a certificate or condition a certificate holder's
exercise of eminent domain until an applicant obtains all final Federal
and State permits and issuance of such permits is sustained if appeal
is filed.\90\ In contrast, many regulated companies and industry trade
organizations assert that the Commission has no authority under the NGA
to condition a certificate holder's exercise of eminent domain because
eminent domain is a right that arises directly from the NGA.\91\ These
commenters express concern that if the Commission defers issuing a
certificate until an applicant has all authorizations needed to
commence construction, it would create practical challenges and could
result in unintended consequences (e.g., a pipeline may need survey
access in order to obtain information necessary for another
permit).\92\
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\90\ See, e.g., Land Trust Alliance 2021 Comments at 9; Jackie
Freedman 2021 Comments at 1; Pipeline Safety Trust 2021 Comments at
2; Terese and Joseph Buchanan May 18, 2021 Comments at 1; Gary
Salata 2021 Comments at 1.
\91\ See, e.g., INGAA 2021 Comments at 36-38; API 2021 Comments
at 15-16; Enbridge 2021 Comments at 70; Cheniere 2021 Comments at 9.
\92\ See, e.g., API 2021 Comments at 17-18; Boardwalk 2021
Comments at 63-65.
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C. The Commission's Consideration of Environmental Impacts
35. Many commenters suggest that the Commission revise its approach
to analyzing alternatives under NEPA. Some commenters recommend that
the Commission consider a broader scope of alternatives (e.g.,
modifications to existing infrastructure, co-location with existing
infrastructure, and alternative sources of energy generation) \93\ or a
broader range of factors to compare alternatives (e.g., the quantified
and monetized impact of GHG emissions; impact of natural gas exports on
domestic energy prices; and cost-effectiveness when accounting for all
significant health, productivity, and opportunity costs).\94\
Additionally, commenters assert that the Commission should not blindly
adopt a project sponsor's project purpose and, consistent with Citizens
Against Burlington, Inc. v. Busey,\95\ must evaluate alternatives to
achieve the Commission's goals, shaped by the application before it and
the Commission's function in the decisional process.\96\ In contrast,
regulated companies and industry trade organizations state that the
current scope of the Commission's alternatives analysis is appropriate
and consistent with NEPA, and has been upheld by the courts.\97\ These
entities also assert that Busey prohibits the Commission from
considering alternatives that would not meet the purpose and need of
the proposed Federal action.\98\
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\93\ See Friends of the Central Shenandoah 2018 Comments at 75;
EPA June 21, 2018 Comments at 1; Leslie Sauer 2018 Comments at 2.
\94\ See New Jersey Conservation Foundation et al. 2021 Comments
at 21-22; Institute for Policy Integrity at New York University
School of Law (Policy Integrity) 2018 Comments at 16, 23-24;
Pennsylvania Departments of Environmental Protection, Conservation
and Natural Resources, and Community and Economic Development 2018
Comments at 6; Carolyn Sellars 2018 Comments at 6.
\95\ 938 F.2d 190, 199 (D.C. Cir. 1991).
\96\ See, e.g., PIO 2021 Comments at 21-22.
\97\ E.g., INGAA 2021 Comments at 39-41.
\98\ INGAA 2021 Comments at 41; Iroquois 2021 Comments at 13-14;
API 2021 Comments at 19-20; Competitive Enterprise Institute 2021
Comments at 2-3; see also Kinder Morgan 2021 Comments at 26-28.
---------------------------------------------------------------------------
36. Many commenters request that the Commission change how it
conducts its cumulative effects analysis under NEPA. For example, NGOs
and other commenters recommend that the Commission conduct regional
evaluations \99\ and prepare programmatic environmental impact
statement (EIS) \100\ to address cumulative effects. To determine the
geographic scope for regional evaluations, commenters recommend that
the Commission use a radius around the proposed project (e.g., 100
miles) \101\ or consider the project scale, gas source, and end-use
location.\102\ In contrast, industry trade organizations and regulated
companies recommend that the Commission continue to use a project-
specific geographic scope for its cumulative effects analysis.\103\
These entities assert that the Commission does not have the authority
under section 7 of the NGA to conduct regional evaluations, as the
Commission only reviews individual pipeline applications, not broader
Federal programs or regional actions where a programmatic review might
be appropriate.\104\
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\99\ See, e.g., Joint NGOs April 2018 Comments at 2.
\100\ E.g., Nature Conservancy 2018 Comments at 2-3; Appalachian
Trail Conservancy 2018 Comments at 3.
\101\ Kirk Frost May 26, 2021 Comments at 8.
\102\ Delaware Riverkeeper Network & Berks Gas Truth 2021
Comments at 57.
\103\ See, e.g., INGAA 2018 Comments at 75; Duke Energy
Corporation 2018 Comments at 51-53; Edison Electric Institute 2018
Comments at 16.
\104\ E.g., Williams 2021 Comments at 34; INGAA 2021 Comments at
44-45; Boardwalk 2021 Comments at 73.
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37. NGOs and individual commenters state that how the Commission
balances environmental impacts against favorable economic impacts is
unclear, lacks transparency, and requires updating.\105\ Several
commenters request that the Commission give environmental impacts
greater weight.\106\ Other commenters criticize the Commission's phased
approach to addressing project impacts under the 1999 Policy Statement,
and recommend that the Commission balance economic and environmental
impacts together.\107\ In contrast, industry trade organizations state
that the Commission's approach under the 1999 Policy Statement properly
balances economic and environmental impacts, giving proportionate
consideration to all impacted stakeholders.\108\ These entities contend
that broadening the balancing would exceed the Commission's discretion
under the NGA \109\ and that the NEPA requirement to take a ``hard
look'' at environmental consequences should remain separate from
consideration of economic impacts.\110\
---------------------------------------------------------------------------
\105\ See, e.g., Delaware Riverkeeper Network 2018 Comments at
92-93; Friends of the Central Shenandoah 2018 Comments at 92-94; Deb
Evans and Rob Schaaf 2018 Comments at 12.
\106\ E.g., PIO 2021 Comments at 56; Elaine Mroz 2018 Comments
at 4.
\107\ See, e.g., New Jersey Conservation Foundation et al. 2021
Comments at 18-22; Policy Integrity 2021 Comments at 4; Chesapeake
Bay Foundation 2018 Comments at 4.
\108\ E.g., API 2021 Comments at 23.
\109\ Williams 2021 Comments at 39.
\110\ INGAA 2018 Comments at 85-89.
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38. Regulated companies and industry trade organizations support
the adoption of other agencies' categorical exclusions under NEPA,
including those referenced in Commission staff's presentation at the
January 19, 2021 Commission meeting (Docket No. RM21-10-000).\111\
Additionally, these entities state that a categorial exclusion should
apply to certain actions that do not currently qualify for the
Commission's blanket certificate authority (e.g., project amendments
that would result in no, or minimal, changes to the environment).\112\
In contrast, NGOs suggest that there is no need for the Commission to
expand its existing categorical exclusions, and they request that the
Commission provide a public notice and comment period for all
[[Page 11554]]
projects in which an applicant proposes to use a categorical
exclusion.\113\
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\111\ INGAA 2021 Comments at 83-85; Enbridge 2021 Comments at
149-150.
\112\ E.g., INGAA 2021 Comments at 84; Enbridge 2021 Comments at
150.
\113\ PIO 2021 Comments at 72-76.
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D. The Efficiency and Effectiveness of the Commission's Review Process
39. Many commenters recommend changes to the Commission's
application review process. For example, some commenters recommend that
all affected stakeholders be brought into the process as early as
possible,\114\ that decisions regarding information requirements be
summarized in a comprehensive application completeness checklist, and
that the Commission's regulations be amended to encourage applicants to
submit complete applications at the outset.\115\ Additionally, several
commenters recommend changes to the Commission's environmental review
process, including that the Commission not prepare a NEPA document
absent substantive environmental data for the entirety of the proposed
route,\116\ that the Commission consider issuing final EISs and
certificates at the same time,\117\ or, alternatively, that the
Commission issue certificates within 90 days of issuance of a final
NEPA document.\118\ Some commenters also state that the Commission
should not inject additional regulatory uncertainty into its review
process by requiring open-ended or unduly expansive environmental
reviews.\119\
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\114\ PIO 2021 Comments at 78; see also Dr. Susan F. Tierney
2021 Comments at 41-42.
\115\ New Jersey Conservation Foundation et al. 2021 Comments at
30-31.
\116\ New Jersey Conservation Foundation et al. 2021 Comments at
31.
\117\ Energy Infrastructure Council (EIC) 2021 Comments at 33;
Spectra 2018 Comments at 95.
\118\ WBI Energy 2021 Comments at 11; INGAA 2018 Comments at 94.
\119\ See, e.g., GPA Midstream Association 2021 Comments at 1;
Laborers' International Union of North America 2021 Comments at 2.
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40. Commenters also make a variety of recommendations to increase
transparency in the Commission's review process and schedules. For
example, some commenters propose that the Commission issue a public
notice when a draft order has been circulated by Commission staff to
the Commissioners,\120\ establish ``permitting timetables'' for NGA
section 7(c) projects,\121\ and clarify deadlines for parties to
intervene or submit studies.\122\ Some commenters also recommend that
there be a ``cooling off'' period after the issuance of a draft EIS to
resolve disputes between an applicant and stakeholders with assistance
from the Commission's Dispute Resolution Service.\123\
---------------------------------------------------------------------------
\120\ Kinder Morgan 2021 Comments at 46.
\121\ WBI Energy 2021 Comments at 11.
\122\ Carolyn Elefant 2021 Comments at 7; Spectra 2018 Comments
at 94-95; INGAA 2018 Comments at 96.
\123\ Tom Russo 2021 Comments at 23.
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41. Several commenters recommend changes to the duration of the
pre-filing process. Recommendations include shortening the pre-filing
process and extending the application review process,\124\ collapsing
pre-filing into the post-filing process to eliminate lengthy processing
times,\125\ and condensing the application review process by
consolidating as much activity as possible in the pre-filing process
and requiring all interested parties planning to object to a project to
do so during pre-filing.\126\
---------------------------------------------------------------------------
\124\ Carolyn Elefant 2021 Comments at 6.
\125\ American Forest & Paper Association et al. 2021 Comments
at 26-27; Spectra 2018 Comments at 98-99.
\126\ United Association 2021 Comments at 35-36; INGAA 2018
Comments at 102.
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42. Many commenters also propose ways to make stakeholder
participation more effective. For example, some commenters propose that
applicants provide transportation or access to public transportation to
public meetings, adequate parking at venues, and options for remote
participation.\127\ Several commenters also recommend that the
Commission provide notices and related materials in multiple languages
\128\ and issue guidance to ensure that pipeline project developers
provide sufficient and timely information.\129\ Additionally, some
commenters recommend that the Commission's new OPP be a neutral
resource to landowners and other stakeholders seeking more information
on the Commission's review process.\130\ Other commenters recommend
that staff prioritize input provided by stakeholders that will be
directly impacted by a project,\131\ and that all comments submitted to
a docket receive a response or some other indication that a member of
Commission staff has read the comments.\132\
---------------------------------------------------------------------------
\127\ E.g., PLAN 2021 Comments at 3; Edward Woll 2021 Comments
at 4; Rev. Betsy Sowers 2021 Comments at 3; Kim Robinson 2021
Comments at 2; Surfrider Foundation 2018 Comments at 2; Delaware
Riverkeeper Network 2018 Comments at 57.
\128\ Egan Millard 2021 Comments at 3; Robert Kearns 2021
Comments at 3; Inbal Goldstein 2021 Comments at 4.
\129\ Dr. Susan F. Tierney 2021 Comments at 42.
\130\ WBI Energy 2021 Comments at 10.
\131\ Kinder Morgan 2021 Comments at 47-48.
\132\ See, e.g., Kim Robinson 2021 Comments at 2; Leslie Sauer
Jones and Stephanie Jones June 2021 Comments at 1; James and Kathy
Chandler 2018 Comments at 1.
---------------------------------------------------------------------------
43. Several commenters note the importance of transparency and
coordination in the interagency review process. Some regulated
companies recommend that the Commission strengthen its role as the lead
agency under NEPA by focusing on educating and training cooperating
agencies to be better prepared to meet their own statutory
deadlines.\133\ Other commenters suggest that the Commission consider
standardized schedules for its review processes, such as publishing
timelines that include pre-filing, preparation of the NEPA document,
and issuance of final orders and authorizations by other agencies,\134\
and that the Commission create a dedicated task force for coordinating
with other agencies.\135\
---------------------------------------------------------------------------
\133\ E.g., Kinder Morgan 2021 Comments at 42-43.
\134\ Enbridge 2021 Comments at 157.
\135\ Kirk Frost May 26, 2021 Comments at 13.
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44. Many commenters support the separate treatment of different
classes of projects, recommending that the Commission provide more
timely review of projects with minimal impacts and certain qualifying
benefits,\136\ or expedite approvals for projects where only an
environmental assessment is required and there is no opposition.\137\
However, other commenters oppose the separate treatment of different
classes of projects, expressing concern that separate treatment would
be arbitrary or discriminatory \138\ and that some projects would be
left in limbo while the Commission takes action on what it perceives as
priority projects.\139\ Some commenters also suggest changes to the
Commission's blanket certificate program, including changing the filing
requirements to reduce the number of required resource reports,
eliminating the need for weekly reports,\140\ increasing both the
automatic and prior notice cost limits,\141\ and adding consideration
of other factors such as a project's acreage to determine eligibility
for blanket certificate authority.\142\
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\136\ Iroquois 2021 Comments at 18-19.
\137\ Kinder Morgan 2021 Comments at 44.
\138\ Americans for Prosperity 2021 Comments at 2.
\139\ AGA 2021 Comments at 39.
\140\ EIC 2021 Comments at 34; TransCanada Corporation 2018
Comments at 32.
\141\ API 2021 Comments at 36.
\142\ WEC Energy Group, Inc. 2018 Comment at 6-7.
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E. The Commission's Consideration of Effects on Environmental Justice
Communities
45. Many commenters suggest that the Commission revise its approach
for identifying environmental justice communities in certificate
proceedings. For example, some commenters recommend that the Commission
use
[[Page 11555]]
census block-level data; \143\ on-the-ground surveys; \144\ social,
environmental, and health indicators; \145\ and other data and tools to
identify such communities.\146\ Additionally, several commenters
recommend that the Commission consult with other Federal and State
agencies for assistance with identifying environmental justice
communities \147\ or allow communities to identify themselves as
environmental justice communities.\148\
---------------------------------------------------------------------------
\143\ See, e.g., PIO 2021 Comments at 86-87; New Jersey
Conservation Foundation et al. 2021 Comments at 38-40.
\144\ See, e.g., Delaware Riverkeeper Network & Berks Gas Truth
2021 Comments at 69; Tom Russo 2021 Comments at 24-25; William F.
Limpert 2021 Comments at 19.
\145\ New Jersey Conservation Foundation et al. 2021 Comments at
35-38; North Carolina Department of Environmental Quality 2021
Comments at 2; EDF 2021 Comments at 57.
\146\ Quincy Democratic City Committee 2021 Comments at 1-2;
Natural Resources Defense Council May 2021 Comments at 14-15.
\147\ EPA 2021 Comments at 7; Jeannie Ambrose 2021 Comments at
2.
\148\ See Save Our Illinois Land (SOIL) 2021 Comments at 1;
William F. Limpert 2021 Comments at 19; Delaware Riverkeeper Network
& Berks Gas Truth 2021 Comments at 69.
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46. Many commenters also recommend changes to how the Commission
evaluates project impacts on environmental justice communities. For
example, NGOs assert that the Commission should always use a reference
or comparison group when evaluating disproportionately high and adverse
impacts on such communities \149\ and ensure that such a group is
neither too geographically narrow nor too demographically similar to
avoid masking disproportionate impacts.\150\ NGOs and individual
commenters recommend that the Commission consider the existing burden
from specific environmental and health indicators when it evaluates
cumulative and historic exposures, including the presence of other
infrastructure and existing pollution levels in the project area.\151\
Additionally, these commenters recommend changes to how the Commission
evaluates the impacts of direct and indirect air pollution on
environmental justice communities.\152\ In contrast, regulated
companies and industry trade organizations state that the Commission
should not make substantive changes to how it evaluates impacts on
environmental justice communities at this time, and recommend that the
Commission wait for further guidance from the White House, EPA, and the
Council on Environmental Quality (CEQ) to ensure consistency across the
Federal Government.\153\
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\149\ New Jersey Conservation Foundation et al. 2021 Comments at
39-40.
\150\ Policy Integrity 2021 Comments at 49-52.
\151\ See, e.g., New Jersey Conservation Foundation et al. 2021
Comments at 36-37; Ann W. Woll 2021 Comments at 5; SOIL 2021
Comments at 3.
\152\ Delaware Riverkeeper Network & Berks Gas Truth 2021
Comments at 77-82; EDF 2021 Comments at 58.
\153\ API 2021 Comments at 37-39; Enbridge 2021 Comments at 167-
168.
---------------------------------------------------------------------------
47. Many commenters state that there are barriers to the
participation of environmental justice communities in Commission
proceedings, including inadequate translation services and the
Commission's reliance on electronic media.\154\ Other commenters state
that Commission proceedings can be highly technical in nature,
rendering them inaccessible to the general public unless a participant
can invest significant time and resources.\155\ A wide range of
commenters recommend changes to the Commission's public notice and
outreach processes to ensure meaningful engagement with environmental
justice communities,\156\ including the Commission's process for
consulting with Tribes.\157\ Many commenters also support the
Commission's formation of OPP \158\ and recommend that the Commission
coordinate with community-based organizations and institutions to
further encourage the participation of environmental justice
communities in Commission proceedings.\159\
---------------------------------------------------------------------------
\154\ Terese and Joseph Buchanan May 18, 2021 Comments at 1; PIO
2021 Comments at 87-89; Robert Kearns 2021 Comments at 4; Jackie
Freedman 2021 Comments at 1; Deborah Brown 2021 Comments at 1.
\155\ New Jersey Conservation Foundation et al. 2021 Comments at
34.
\156\ See, e.g., Kinder Morgan 2021 Comments at 58-59; Ohio
Environmental Council 2021 Comments at 3.
\157\ Coharie Intra-Tribal Council, Haliwa-Saponi Indian Tribe,
Lumbee Tribe of North Carolina, Meherrin Indian Nation of North
Carolina, Nottoway Indian Tribe of Virginia, and Occaneechi Band of
Saponi Nation 2021 Comments at 2; Haliwa-Saponi Indian Tribe 2021
Comments at 2; Delaware Riverkeeper Network & Berks Gas Truth 2021
Comments at 71.
\158\ See, e.g., API 2021 Comments at 41; EPA 2021 Comments at
8; National Fuel 2021 Comments at 22.
\159\ New Jersey Conservation Foundation et al. 2021 Comments at
33-35; Delaware Riverkeeper Network & Berks Gas Truth 2021 Comments
at 73-74.
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48. Several commenters assert that section 7(e) of the NGA provides
the Commission with broad conditioning authority to address project
impacts on environmental justice communities in its certificates.\160\
Some commenters state that the Commission should use its NEPA
alternatives analysis to identify and evaluate ways to mitigate impacts
on environmental justice communities.\161\ If mitigating adverse
impacts on environmental justice communities is not possible, other
commenters assert that the Commission should deny a certificate.\162\
---------------------------------------------------------------------------
\160\ New Jersey Division of Rate Counsel 2021 Comments at 23;
PIO 2021 Comments at 105.
\161\ INGAA 2021 Comments at 98-99; EPA 2021 Comments at 8-9.
\162\ See, e.g., Attorneys General of Massachusetts,
Connecticut, Maryland, Minnesota, New Jersey, New York, Oregon,
Rhode Island, and the District of Columbia 2021 Comments at 32-33
(Attorneys General of Massachusetts et al.); see also PLAN 2021
Comments at 5; Katherine Manuel 2021 Comments at 5; Elizabeth Moulds
2021 Comments at 4; Jessica Greenwood 2021 Comments at 4; Shayna
Gleason 2021 Comments at 3; Rick Mattila 2021 Comments at 3.
---------------------------------------------------------------------------
49. In contrast, many regulated companies and industry trade
organizations state that no Federal statute requires the Commission to
implement specific remedial measures to address project impacts on
environmental justice communities, but they assert that NEPA provides
an appropriate framework in which to analyze such impacts.\163\ These
entities also contend that that the Commission's conditioning authority
under section 7(e) of the NGA is limited to direct project impacts and
the Commission could not require measures to redress prior industrial
impacts on environmental justice communities or impacts outside of the
Commission's jurisdiction.\164\
---------------------------------------------------------------------------
\163\ See, e.g., Williams 2021 Comments at 60-62, 65; Enbridge
2021 Comments at 178-180, 186; Kinder Morgan 2021 Comments at 48,
57; INGAA 2021 Comments at 88-90.
\164\ See, e.g., Enbridge 2021 Comments at 181; API 2021 Comment
at 44-45.
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III. Goals and Objectives of the Updated Certificate Policy Statement
50. While significant changes have occurred in the past 23 years,
the Commission's goals and objectives with this Updated Policy
Statement remain consistent with those of the 1999 Policy Statement,
including to: (1) ``appropriately consider the enhancement of
competitive transportation alternatives, the possibility of over
building, the avoidance of unnecessary disruption of the environment,
and the unneeded exercise of eminent domain;'' \165\ (2) ``provide
appropriate incentives for the optimal level of construction and
efficient customer choices;'' \166\ and (3) ``provide an incentive for
applicants to structure their projects to avoid, or minimize, the
potential adverse impacts that could result from construction of the
project.'' \167\
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\165\ 1999 Policy Statement, 88 FERC at 61,737.
\166\ Id. at 61,743.
\167\ Id.
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[[Page 11556]]
51. As discussed above, the 1999 Policy Statement included an
analytical framework for how the Commission would evaluate the effects
of certificating new projects on economic interests. With this Updated
Policy Statement, the Commission intends to provide a more
comprehensive analytical framework for its decision-making process.
Specifically, we provide clarity on how the Commission will evaluate
all factors bearing on the public interest, including the balancing of
economic and environmental interests in determining whether a project
is required by the public convenience and necessity, thus providing
more regulatory certainty in the Commission's review process and public
interest determinations.
IV. Updated Certificate Policy Statement
A. Factors To Be Balanced in Assessing the Public Convenience and
Necessity
52. In determining whether to issue a certificate of public
convenience and necessity, the Commission will weigh the public
benefits of a proposal, the most important of which is the need that
will be served by the project, against its adverse impacts.
1. Consideration of Project Need
53. To demonstrate that a project is required by the public
convenience and necessity, an applicant must first establish that the
proposed project is needed. As indicated above, the Commission's
expectations and requirements for how applicants should demonstrate
project need have evolved over time. In the 1999 Policy Statement, the
Commission noted concerns associated with relying ``primar[ily]'' \168\
or ``almost exclusively'' \169\ on contracts to establish need for a
new project. Those concerns included the ``additional issues [that
arise] when the contracts are held by pipeline affiliates'' \170\ and
the difficulty such a policy creates for ``articulat[ing] to landowners
and community interests why their land must be used for a new pipeline
project.'' \171\ Thus, the 1999 Policy Statement provided that:
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\168\ Id. at 61,744.
\169\ Id.
\170\ Id.
\171\ Id.
[r]ather than relying only on one test for need, the Commission will
consider all relevant factors reflecting on the need for the
project. These might include, but would not be limited to, precedent
agreements, demand projections, potential cost savings to consumers,
or a comparison of projected demand with the amount of capacity
currently serving the market.\172\
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\172\ Id. at 61,747 (emphasis added).
54. However, in practice, the Commission has relied almost
exclusively on precedent agreements to establish project need. Although
courts have upheld the Commission's practice in certain contexts,\173\
we find that we cannot adequately assess project need without also
looking at evidence beyond precedent agreements. After all, as the
Commission's 1999 Policy Statement noted, many different factors may
indicate the need--or lack thereof--for a new interstate pipeline.
While precedent agreements may indicate one or more shipper's
willingness to contract for new capacity, such willingness may not in
all circumstances be sufficient to sustain a finding of need--e.g., in
the face of contrary evidence or where there is reason to discount the
probative value of those precedent agreements. Accordingly, we find
that looking only to precedent agreements, and ignoring other,
potentially contrary, evidence may cause the Commission to reach a
determination on need that is inconsistent with the weight of the
evidence in any particular proceeding, in violation of both the NGA and
the Commission's responsibilities under the Administrative Procedure
Act.\174\ We reaffirm the Commission's commitment to consider all
relevant factors bearing on the need for a project. Although precedent
agreements remain important evidence of need, and we expect that
applicants will continue to provide precedent agreements, the existence
of precedent agreements may not be sufficient in and of themselves to
establish need for the project. The Commission will also consider, as
relevant, the circumstances surrounding the precedent agreements (e.g.,
whether the agreements were entered into before or after an open season
and the results of the open season, including the number of bidders,
whether the agreements were entered into in response to LDC or
generator requests for proposals (RFP) and, if so, the details around
that RFP process, including the length of time from RFP to execution of
the agreement), as well as other evidence of need, as discussed below.
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\173\ See, e.g., Minisink Residents for Envtl. Pres. & Safety v.
FERC, 762 F.3d 97, 110 n.10 (D.C. Cir. 2014) (noting that the 1999
Policy Statement ``permits'' but does not ``require[ ]'' the
Commission to '' look[ ] beyond the market need reflected by the
applicant's existing contracts with shippers''). But see
Environmental Defense Fund v. FERC, 2 F.4th 953, 973 (D.C. Cir.
2021) (finding that is was arbitrary and capricious for the
Commission to rely solely on a single precedent agreement with an
affiliate shipper to establish need when demand for natural gas in
the area was flat and the Commission neglected to make a finding as
to whether the proposed pipeline would result in a more economical
alternative to existing pipelines).
\174\ Under the Administrative Procedure Act, an agency cannot
ignore substantial evidence bearing on the agency decision. See 5
U.S.C. 706; see also, e.g., Motor Vehicles Mfrs. Ass'n of U.S., Inc.
v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (holding
that an agency decision is arbitrary and capricious if it ``entirely
fail[s] to consider an important aspect of the problem'').
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55. For all categories of proposed projects, we encourage
applicants to provide specific information detailing how the gas to be
transported by the proposed project will ultimately be used, why the
project is needed to serve that use, and the expected utilization rate
of the proposed project. 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.
56. For a market-driven project that is responding to increased
natural gas demand, the evidence relating to the need for the project
could include a market study that projects volumetric or peak day load
growth. An applicant may rely on publicly available analyses by the
Energy Information Administration or other third parties showing
projections of market growth. The applicant could also provide its best
assessment, based on publicly available information or data, of whether
other transportation suppliers may be able to meet the incremental
demand with existing capacity to demonstrate why new pipeline
construction is necessary. For individual shippers, load growth
profiles, gas supply portfolios, and any advanced approval of contracts
by State public service commissions would also be helpful in showing
evidence of project need.
57. Some projects may not directly serve a customer but rather are
being undertaken to add supplies of natural gas to the market. Such
projects may be driven by natural gas producers or natural gas
utilities attempting to provide supply at lower cost or support
reliability by increasing the volumes of natural gas available to
customers. For these projects, evidence to demonstrate consumer
benefits may include projections of the net benefits, for example
projected lower natural gas prices for consumers due to increased
supply competition, compared to the incremental costs of transportation
on the new pipeline. The Commission will consider record evidence of
regional projections for both gas supply and market growth, as well as
pipeline-specific studies in these areas.
[[Page 11557]]
58. Other pipeline projects may be intended to support more
efficient system operations by replacing older and inefficient
facilities (e.g., compressors and leak-prone pipes) and performing
other infrastructure improvements, or to respond to changing State and
Federal Government pipeline safety or environmental requirements. For
these projects, applicants may document how proposed facilities, for
example pipeline or compressor replacements, provide expected system
benefits, such as reduced operating costs, improved pipeline integrity,
or reduced natural gas leaks. In addition, an applicant may document
how a project avoids adverse impacts or satisfies any changing State or
Federal Government regulations.
59. The Commission will consider both current and projected future
demand for a project based on the evidence in the record. Applicants
are encouraged to submit analyses showing how market trends as well as
current and expected policy and regulatory developments would affect
future need for the project. Applicants are also encouraged to provide
a thorough assessment of alternatives, including supporting data, to
facilitate the Commission's review. In assessing the strength of the
applicant's need showing, the Commission will consider record evidence
of alternatives to the proposed project. The Commission's evaluation
will include information indicating that other suppliers would be able
to meet some or all of the needs to be served by the proposed project
on a timely, competitive basis or whether other factors may eliminate
or curtail such needs.
60. As the Commission noted in the 1999 Policy Statement, projects
supported by precedent agreements with affiliates raise unique concerns
regarding need for the project.\175\ And, as the United States Court of
Appeals for the District of Columbia Circuit (D.C. Circuit) recently
held in Environmental Defense Fund v. FERC, ``evidence of `market need'
is too easy to manipulate when there is a corporate affiliation between
the proponent of a new pipeline and a single shipper who have entered
into a precedent agreement.'' \176\ Given those concerns, affiliate
precedent agreements will generally be insufficient to demonstrate
need. Instead, where projects are backed primarily by precedent
agreements with affiliates, the Commission will consider additional
information, such as the evidence outlined above.\177\ We will
determine how much additional evidence is required on a case-by-case
determination.
---------------------------------------------------------------------------
\175\ 1999 Policy Statement, 88 FERC at 61,739-40 (noting that
the ``use of contracts with affiliates to demonstrate market support
for projects has generated opposition from affected landowners and
competitor pipelines who question whether the contracts represent
real market demand'') and 61,744 (stating that ``[u]sing contracts
as the primary indicator of market support for the proposed pipeline
project also raises additional issues when the contracts are held by
pipeline affiliates.'').
\176\ 2 F.4th at 973.
\177\ See supra P 55.
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61. To the extent the Commission receives information in the record
from third parties addressing the need for a project, that too will be
considered in our analysis. Where an applicant fails to carry its
burden of demonstrating the proposed project is needed, the Commission
will not undertake any further consideration of the project's benefits
or adverse effects.
2. Consideration of Adverse Effects
62. In determining whether to issue a certificate of public
convenience and necessity, the Commission will consider four major
interests that may be adversely affected by the construction and
operation of new projects: (1) The interests of the applicant's
existing customers; (2) the interests of existing pipelines and their
captive customers; (3) environmental interests; and (4) the interests
of landowners and surrounding communities, including environmental
justice communities. The Commission may deny an application based on
any of these types of adverse impacts.
a. Impacts on Existing Customers of the Pipeline Applicant
63. Existing customers of the pipeline applicant may be adversely
affected if a proposed project causes an increase in rates or a
degradation in service. Regarding potential rate increases, although we
are no longer characterizing this issue as a ``threshold question'' in
this Updated Policy Statement, our policy of no financial subsidies
remains unchanged.\178\ That is, the pipeline applicant must be
prepared to financially support its proposed project without relying on
subsidization by its existing customers. As to other potential impacts
to existing customers, like a degradation in service, we will consider
the applicant's efforts to eliminate or minimize any such impacts.
---------------------------------------------------------------------------
\178\ 1999 Policy Statement, 88 FERC at 61,746-47, clarified, 90
FERC at 61,391-96.
---------------------------------------------------------------------------
64. As the Commission stated in the 1999 Policy Statement, the
policy of no financial subsidies does not mean that a project sponsor
has to bear all the financial risk of the project; the risk can be
shared with new customers, but it generally cannot be shifted to
existing customers.\179\ One of the Commission's regulatory goals is to
protect captive customers from rate increases during the terms of their
contracts that are unrelated to the costs associated with their
service. And existing customers of the expanding pipeline should not
have to subsidize a project that does not serve them.
---------------------------------------------------------------------------
\179\ 1999 Policy Statement, 88 FERC at 61,746. For new pipeline
companies, without existing customers, this requirement has no
application.
---------------------------------------------------------------------------
65. The 1999 Policy Statement also stated that the requirement that
a new project must be financially viable without subsidies does not
eliminate the possibility that, in some instances, project costs should
be rolled into the rates of existing customers.\180\ In most instances,
incremental pricing will avoid subsidies for the new project, but the
situation may be different in cases of inexpensive expansibility that
is made possible because of earlier, costly construction.\181\ In that
instance, because the existing customers bear the cost of the earlier,
more costly construction in their rates, incremental pricing could
result in the new customers receiving a subsidy from the existing
customers because the new customers would not face the full cost of the
construction that makes their new service possible.
---------------------------------------------------------------------------
\180\ Id.
\181\ Id.
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66. Additionally, expansion costs could still be included in
existing shippers' rates when proposed projects are designed to improve
service for existing customers.\182\ Increasing the rates of existing
customers to pay for projects designed to benefit those customers
(i.e., by replacing existing capacity, improving reliability, or
providing flexibility) is not a subsidy.\183\
---------------------------------------------------------------------------
\182\ Order Clarifying Statement of Policy, 90 FERC at 61,391.
\183\ Id. at 61,393.
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b. Impacts on Existing Pipelines and Their Customers
67. As the Commission stated in the 1999 Policy Statement, existing
pipelines that already serve the market to be served by the proposed
new capacity may be affected by the potential loss of market share and
the possibility that they may be left with unsubscribed capacity
investment.\184\ Additionally, captive customers of existing pipelines
may be affected if they must pay for the resulting unsubscribed
capacity in their rates. These remain important concerns.
---------------------------------------------------------------------------
\184\ 1999 Policy Statement, 88 FERC at 61,748.
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[[Page 11558]]
68. It has been the Commission's long-standing position that it has
an obligation to ensure fair competition, but that it is not the role
of the Commission to protect existing pipelines from the effects of
competition.\185\ While we continue to maintain this position, we also
emphasize that it is not just unfair competition that can harm captive
customers. The Commission must consider the possible harm to captive
customers that can result from a new pipeline, regardless of whether
there is evidence of unfair competition.
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\185\ See Ruby Pipeline, L.L.C., 128 FERC ] 61,224, at PP 37-39
(2009); see also 1999 Policy Statement, 88 FERC at 61,748.
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69. Congress enacted the NGA ``with the principal aim of
encouraging the orderly development of plentiful supplies of . . .
natural gas at reasonable prices, and protecting consumers against
exploitation at the hands of natural gas companies.'' \186\ Ensuring
the orderly development of natural gas supplies includes preventing
overbuilding. One way that the Commission can prevent overbuilding is
through careful consideration of a proposed project's impacts on
existing pipelines. To the extent that a proposed project is designed
to substantially serve demand already being met on existing pipelines,
that could be an indication of potential overbuilding. Nevertheless, in
such instances, the Commission will also consider whether the proposed
project would offer certain advantages (e.g., providing lower costs to
consumers or enhancing system reliability).
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\186\ City of Clarksville, Tennessee v. FERC, 888 F.3d at 479
(quoting NAACP v. FPC, 425 U.S. at 669-70 and FPC v. Hope Nat. Gas
Co., 320 U.S. at 610).
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70. Comments from existing pipelines and their captive customers
about the potential impacts from a proposed project will be an
important piece of our review. Additionally, comments from State
utility or public service commissions as to how a proposed project may
impact existing pipelines will be particularly useful.
c. Environmental Impacts
71. As noted above, the 1999 Policy Statement included an
analytical framework for how the Commission would evaluate the effects
of certificating new projects on economic interests. However, the 1999
Policy Statement did not describe how the Commission would consider
environmental interests in its decision-making process and, more
specifically, how it would balance these interests with the economic
interests of a project. Instead, it stated that environmental interests
would be ``separately considered'' in a certificate proceeding after
the balancing of public benefits against the residual adverse effects
on economic interests.\187\
---------------------------------------------------------------------------
\187\ 1999 Policy Statement, 88 FERC at 61,747.
---------------------------------------------------------------------------
72. While the 1999 Policy Statement focused on economic impacts,
the consideration of environmental impacts is an important part of the
Commission's responsibility under the NGA to evaluate all factors
bearing on the public interest.\188\ In the years immediately following
issuance of the 1999 Policy Statement, the Commission would sometimes
issue a preliminary determination on the non-environmental issues
associated with a proposed project, and then issue a subsequent
decision on the certificate application following the environmental
review process; however, in practice, Commission staff would begin
review of both the economic and environmental impacts following the
filing of an application. Today, the Commission no longer issues
preliminary determinations on non-environmental issues, and the
Commission and staff continue to review the economic and environmental
impacts of projects concurrently. Thus, the sequential framing of these
analyses in the 1999 Policy Statement has created some confusion and
incorrectly conveyed how the Commission considers environmental
impacts. In addition to questions about sequencing, we have seen a
significant increase in comments from a range of stakeholders
expressing concerns about how the Commission considers environmental
impacts, including impacts on climate change and environmental justice
communities, in its public interest determinations.
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\188\ See Atl. Ref. Co. v. Pub. Serv. Comm'n of N.Y., 360 U.S.
at 391 (holding that the NGA requires the Commission to consider
``all factors being on the public interest''); see also Sabal Trail,
867 F.3d at 1373 (explaining that the Commission must consider a
pipeline's direct and indirect GHG emissions because the Commission
may ``deny a pipeline certificate on the ground that the pipeline
would be too harmful to the environment'').
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73. To provide more clarity and regulatory certainty to all
participants in certificate proceedings, we explain here how the
Commission will consider environmental impacts.\189\ The Commission
will balance all impacts, including economic and environmental impacts,
together in its public interest determinations under the NGA. As
discussed further below, the potential adverse impacts will be weighed
against the evidence of need and other potential benefits of a proposal
in determining whether to issue a certificate of public convenience and
necessity.
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\189\ Recognizing that CEQ is in the process of revising its
NEPA regulations, the Commission will consider the comments in this
docket regarding NEPA in our future review of our regulations,
procedures, and practices for implementing NEPA.
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74. We will consider environmental impacts and potential mitigation
in both our environmental reviews under NEPA and our public interest
determinations under the NGA. The Commission expects applicants to
structure their projects to avoid, or minimize, potential adverse
environmental impacts. Additionally, we expect applicants to propose
measures for mitigating impacts, and we will consider those measures--
or the lack thereof--in balancing adverse impacts against the potential
benefits of a proposal. Further, the NGA grants the Commission broad
authority to attach reasonable terms and conditions to certificates of
public convenience and necessity.\190\ Should we deem an applicant's
proposed mitigation of impacts inadequate to enable us to reach a
public interest determination, we may condition the certificate to
require additional mitigation. We may also deny an application based on
any of the types of adverse impacts described herein, including
environmental impacts, if the adverse impacts as a whole outweigh the
benefits of the project and cannot be mitigated or minimized.
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\190\ 15 U.S.C. 717f(e); see also, e.g., ANR Pipeline Co. v.
FERC, 876 F.2d 124, 129 (D.C. Cir. 1989) (noting the Commission's
``extremely broad'' conditioning authority).
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75. As noted above, since issuance of the 1999 Policy Statement,
the Commission's policy for considering climate impacts has
evolved.\191\ In addition to the significant increase in comments from
stakeholders, the courts have issued several decisions addressing the
Commission's evaluation of GHG emissions in certificate proceedings.
The D.C. Circuit recently held that reasonably foreseeable downstream
GHG emissions are an indirect effect of the Commission authorizing
proposed projects \192\ and are relevant to the Commission's
determination of whether proposed projects are required by the public
convenience and necessity.\193\
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\191\ Supra P 15.
\192\ Sabal Trail, 867 F.3d at 1374.
\193\ Id. at 1373. In Birckhead v. FERC, 925 F.3d 510, 518 (D.C.
Cir. 2019), the D.C. Circuit rejected the Commission's position that
Sabal Trail is limited to the narrow facts of that case. While the
court in Birckhead acknowledged that downstream emissions may not
always be a foreseeable effect of natural gas projects, it rejected
the notion that downstream GHG emissions are a reasonably
foreseeable indirect effect of a natural gas project only if a
specific end destination is identified. The court further noted that
the Commission should attempt to obtain information on downstream
uses to determine whether downstream GHG emissions are a reasonably
foreseeable effect of the project. Birckhead, 925 F.3d at 518-19.
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[[Page 11559]]
76. Concurrently with this Updated Policy Statement, we are issuing
a separate policy statement to explain how the Commission will assess
project impacts on climate change in certificate proceedings going
forward.\194\ This separate policy statement describes Commission
procedures for evaluating climate impacts under NEPA and explains how
the Commission will integrate climate considerations into its public
convenience and necessity findings under the NGA, including how the
Commission will consider measures to mitigate climate impacts. When
making public interest determinations, we intend to fully consider
climate impacts, in addition to other environmental impacts.
---------------------------------------------------------------------------
\194\ GHG Policy Statement, 178 FERC ] 61,108.
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d. Impacts on Landowners and Surrounding Communities
77. The construction and operation of new natural gas
infrastructure has the potential to result in adverse impacts on the
landowners and communities surrounding a project. As the Commission
stated in the 1999 Policy Statement:
[l]andowners whose land would be condemned for the new pipeline
right-of-way, under eminent domain rights conveyed by the
Commission's certificate, have an interest as does the community
surrounding the right-of-way. The interest of these groups is to
avoid unnecessary construction, and any adverse effects on their
property associated with a permanent right-of-way.\195\
---------------------------------------------------------------------------
\195\ 1999 Policy Statement, 88 FERC at 61,748.
In the over 20 years that have passed since issuance of the 1999
Policy Statement, the Commission has seen an increase in proposals for
projects in more densely populated areas, as well as a significant
increase in comments from landowners raising a multitude of economic,
environmental, and others concerns with proposed projects.
78. While the 1999 Policy Statement focused primarily on the
economic impact associated with a permanent right-of-way on a
landowner's property,\196\ going forward, and as discussed below, our
analysis of impacts to landowners will be more expansive. This fuller
consideration of landowner impacts is consistent with the Commission's
approach in recent years of more fully engaging with landowners to
ensure that their concerns are properly considered in our proceedings.
For example, in June 2021, the Commission established OPP, in part, to
facilitate public participation in Commission proceedings.
---------------------------------------------------------------------------
\196\ Id. at 61,749 (``The balancing of interests and benefits
that will precede the environmental analysis will largely focus on
economic interests such as the property rights of landowners.'').
---------------------------------------------------------------------------
79. In addition to the increase in comments from landowners since
issuance of the 1999 Policy Statement, the Commission has also seen a
significant increase in comments raising environmental justice
concerns. In recent years, issues surrounding environmental justice and
equity have received increased focus and attention at both the State
and Federal levels, as demonstrated by the recent issuance of Executive
Orders 13985 and 14008, referenced above.\197\ The Commission is
committed to ensuring that environmental justice and equity concerns
are better incorporated into our decision-making processes.
Accordingly, we clarify that our consideration of impacts to
communities surrounding a proposed project will include an assessment
of impacts to any environmental justice communities and of necessary
mitigation to avoid or lessen those impacts.
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\197\ Supra P 16.
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80. The Commission and applicants have a shared responsibility to
engage communities that may be impacted by a proposed project. This
responsibility includes ensuring effective communication with
landowners and environmental justice communities about potential
impacts and giving careful consideration to the input of such parties
during the agency proceeding. Below, we further discuss our
expectations for how pipeline applicants will engage with landowners,
steps the Commission has taken to protect landowner interests, and how
the Commission will consider potential impacts to landowners and
environmental justice communities.
i. Impacts on Landowners
81. As noted above, once the Commission grants a certificate of
public convenience and necessity, section 7(h) of the NGA authorizes a
certificate holder to acquire the necessary land or property to
construct the approved facilities by exercising the right of eminent
domain for those lands for which it could not negotiate an easement
with landowners.\198\ As the Commission has previously recognized:
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\198\ 15 U.S.C. 717f(h).
[t]here is no question that eminent domain is among the most
significant actions that a government may take with regard to an
individual's private property. And the harm to an individual from
having their land condemned is one that may never be fully remedied,
even in the event they receive their constitutionally-required
compensation.\199\
---------------------------------------------------------------------------
\199\ Limiting Authorizations to Proceed with Construction
Activities Pending Rehearing, Order 871-B, 86 FR 26150 (May 13,
2021), 175 FERC ] 61,098, at P 47 (2021).
Thus, looking only at the economic impacts associated with eminent
domain does not sufficiently account for the full scope of impact on
landowners. Landowners whose property is subject to eminent domain
often experience intangible impacts, which cannot always be monetized.
Our consideration of landowner impacts will be based upon robust early
engagement with all interested landowners, as well as continued
evaluation of input from such parties during the course of any given
proceeding. And we will, to the extent possible, assess a wider range
of landowner impacts.
82. Given the serious impacts associated with the use of eminent
domain, we expect pipeline applicants to take all appropriate steps to
minimize the future need to use eminent domain. This includes engaging
with the public and interested stakeholders during the planning phase
of projects to solicit input on route concerns and incorporate
reroutes, where practicable, to address landowner concerns, as well as
providing landowners with all necessary information. Additionally, we
expect pipelines to take seriously their obligation to attempt to
negotiate easements respectfully and in good faith with impacted
landowners. The Commission will look unfavorably on applicants that do
not work proactively with landowners to address concerns.
83. Additionally, we note that that, while a certificate provides
the holder with significant rights and privileges, it also imposes
concomitant responsibilities, including complying with all certificate
conditions. Specifically, certificate holders must comply with
requirements regarding restoration of the pipeline right-of-way.
Failure to comply with such requirements could mean that a pipeline is
out of compliance with its certificate, and could lead to compliance
action by the Commission, including referral to the Commission's Office
of Enforcement for further investigation and potential civil
penalties.\200\
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\200\ See, e.g., Midship Pipeline Co., LLC, 177 FERC ] 61,187
(2021).
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84. Although the Commission does not have the authority to deny or
restrict the power of eminent domain in a section 7 certificate,\201\
or to oversee the
[[Page 11560]]
acquisition of property rights through eminent domain, including issues
regarding the timing of and just compensation for the acquisition of
property rights,\202\ the Commission has recently taken steps within
its authority to protect landowner interests. Specifically, the
Commission issued Order No. 871-B, which precludes authorization of
construction during the rehearing period for certificate orders and
pending resolution of rehearing requests reflecting opposition to
project construction, operation, or need (subject to a time
limitation), and which establishes a general policy, subject to a case-
by-case determination, of staying certificate orders during the
rehearing period and pending Commission resolution of any timely
requests for rehearing filed by landowners (also subject to a time
limitation).\203\
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\201\ See Midcoast Interstate Transmission, Inc. v. FERC, 198
F.3d 960, 973 (D.C. Cir. 2000) (``The Commission does not have the
discretion to deny a certificate holder the power of eminent
domain.'').
\202\ PennEast Pipeline Co., LLC, 174 FERC ] 61,056, at P 10
(2021) (citing Atl. Coast Pipeline, LLC, 164 FERC ] 61,100, at P 88
(2018); Mountain Valley Pipeline, LLC, 163 FERC ] 61,197, at P 76
(2018); PennEast Pipeline Co., LLC, 164 FERC ] 61,098, at P 33 n.82
(2018)).
\203\ Limiting Authorizations to Proceed with Construction
Activities Pending Rehearing, Order 871-B, 86 FR 26150 (May 13,
2021), 175 FERC ] 61,098, order on reh'g, Order 871-C, 86 FR 43077
(Aug. 6, 2021), 176 FERC ] 61,062 (2021).
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85. We acknowledge that in many cases pipeline applicants will not
be able to acquire all the necessary right-of-way by negotiation and in
such instances may need to use eminent domain. In assessing potential
impacts to landowners, the Commission will consider the steps a
pipeline applicant has already taken to acquire lands through
respectful and good faith negotiation, as well as the applicant's plans
to minimize the use of eminent domain upon receiving a certificate.
And, as discussed further below, the potential adverse impacts to
landowners, along with other adverse impacts, will be weighed against
the evidence of need and potential benefits of a proposal in
determining whether to issue a certificate of public convenience and
necessity.
ii. Impacts on Environmental Justice Communities
86. Our evaluation of the impacts of a proposed interstate natural
gas pipeline will include a robust consideration of its impacts on
environmental justice communities.\204\ We recognize that environmental
justice communities have long borne a disproportionate share of the
impacts associated with industrial development near their residences,
workplaces, religious institutions, and schools. That history often
comes with significant, deleterious consequences. For example,
environmental justice communities frequently experience health
disparities, such as higher rates of asthma and certain cancers
relative to society at large, which can render individuals in those
communities particularly susceptible to incremental pollution and other
adverse impacts that may be caused by a new project.\205\ The
Commission's public interest responsibility demands that we seriously
evaluate these considerations and incorporate them into the balancing
test outlined below.\206\
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\204\ We recognize that the Commission's environmental justice
analysis will also apply to the Commission's authorization of
liquefied natural gas facilities, pursuant to section 3 of the NGA.
While those authorizations are not the subject of this Updated
Policy Statement, this commitment is worth noting in this discussion
of impacts on environmental justice communities.
\205\ Policy Integrity 2021 Comments at 46-47, 55-56.
\206\ Vecinos para el Bienestar de la Comunidad Costera v. FERC,
6 F.4th 1321 (D.C. Cir. 2021) (Vecinos) (remanding a Commission
order based in part on a ``deficient'' environmental justice
analysis).
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87. For the Commission to adequately evaluate the impacts of a
proposed project on environmental justice communities, it is essential
to promptly and properly identify such communities. Commenters noted
the insufficiency of relying only on initial screening tools to
identify environmental justice communities.\207\ While data from
screening tools such as the EPA's EJSCREEN may be useful, additional
data collection methods may be necessary to properly identify
environmental justice communities. We encourage applicants to consult
with guidance provided by EPA, CEQ, and other authoritative
sources,\208\ to ensure that the Commission has before it all the data
needed to adequately identify environmental justice communities
potentially affected by a proposed project. We will evaluate and
incorporate, as appropriate, any subsequently issued guidance when
considering how to identify environmental justice communities affected
by a proposed project. We encourage project developers to do the same.
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\207\ For example, screening tool data ``may need to be
supplemented with additional or more localized information and/or
ground truthing.'' EPA 2021 Comments at 7, 9.
\208\ This may include, for example, relevant State or local
agencies. We also note that Federal agencies, including EPA and CEQ,
are in the process of updating their guidance regarding
environmental justice.
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88. Many commenters encourage the Commission to factor in
demographic considerations--such as disability, age, household income,
pre-existing health conditions, and level of education.\209\ We
recognize that such demographic considerations may be appropriate to
consider on a project-by-project basis or as Federal guidance evolves.
---------------------------------------------------------------------------
\209\ North Carolina DEQ 2018 Comments at 8. See also Niskanen
Center 2018 Comments at 17-19.
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89. Additionally, we recognize that proper selection of both the
geographic unit of analysis (e.g., census block group) within the
affected environment and the reference community (e.g., county/parish,
or State) is necessary to ensure that affected environmental justice
communities are properly identified for consideration in the
Commission's analysis.\210\ The affected environment for environmental
justice analysis purposes may vary according to the characteristics of
the particular project and the surrounding communities.\211\
Accordingly, the Commission will ensure that the delineation of the
affected area, selected geographic unit of analysis, and reference
community are consistent with best practices and Federal guidance and
will not be limited to a one-size-fits-all approach.\212\
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\210\ An overly broad geographic unit of analysis, for example,
could dilute the presence of environmental justice communities. See
Policy Integrity 2021 Comments at 46-48; see also Federal
Interagency Working Group on Environmental Justice & NEPA Committee,
Promising Practices for EJ Methodologies in NEPA Reviews at 21, 26
(March 2016), <a href="https://www.epa.gov/sites/production/files/2016-08/documents/nepa_promising_practices_document_2016.pdf">https://www.epa.gov/sites/production/files/2016-08/documents/nepa_promising_practices_document_2016.pdf</a> (EJ IWG & NEPA
Committee).
\211\ See Vecinos, 6 F.4th at 1330 (``When conducting an
environmental justice analysis, an agency's delineation of the area
potentially affected by the project must be `reasonable and
adequately explained,' . . . and include `a rational connection
between the facts found and the decision made.' '' (citations
omitted)).
\212\ See EJ IWG & NEPA Committee at 21-28.
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90. The consideration of cumulative impacts \213\ is particularly
important when it comes to conducting an environmental justice
analysis.\214\ An environmental analysis that, for example, considers
incremental impacts of a project in isolation will, almost by
definition, fail to adequately consider the project's impact on a
community that already experiences elevated levels of pollution or
other adverse impacts. To adequately capture the effects of
[[Page 11561]]
cumulative impacts, it is essential that the Commission consider those
pre-existing conditions and how the adverse impacts of a proposed
project may interact with and potentially exacerbate them. To that end,
several commenters provide recommendations for specific health and
environmental indicators that the Commission should consider when it
evaluates cumulative exposures. These include factors such as air
pollution, heat vulnerability, as well as the effects of pre-existing
infrastructure (e.g., bus depots, highways, and waste facilities).\215\
That analysis can be informed by a wide range of data, including, for
example, health statistics such as cancer clusters, asthma rates,
social vulnerability data, and community resilience data.\216\ We will
carefully examine cumulative impacts on environmental justice
communities and encourage applicants to identify and submit any such
data that may be relevant for the particular environmental justice
communities affected by their proposed project.
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\213\ `` `Cumulative impact' is the impact on the environment
which results from the incremental impact of the action when added
to other past, present, and reasonably foreseeable future actions
regardless of what agency (Federal or non-Federal) or person
undertakes such other actions. Cumulative impacts can result from
individually minor but collectively significant actions taking place
over a period of time.'' 40 CFR 1508.7 (1978).
\214\ See EDF 2021 Comments at 58; Attorneys General of
Massachusetts et al. 2021 Comments at 31; Delaware Riverkeeper &
Berks Gas Truth 2021 Comments at 78 and 83; and SOIL 2021 Comments
at 3.
\215\ New Jersey Conservation Foundation et al. 2021 Comments
2021 at 36-37.
\216\ EPA, EnviroAtlas Interactive Map, <a href="https://www.epa.gov/enviroatlas/enviroatlas-interactive-map">https://www.epa.gov/enviroatlas/enviroatlas-interactive-map</a> (last visited Feb. 1, 2022);
Centers for Disease Control and Prevention, Social Vulnerability
Index Interactive Map, <a href="https://svi.cdc.gov/map.html">https://svi.cdc.gov/map.html</a> (last visited
Feb. 1, 2022).
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91. The Commission will also consider measures to eliminate or
mitigate a project's adverse impacts on environmental justice
communities. We recognize that mitigation must be tailored to the needs
of different environmental justice communities. This will require close
consultation between the project developer, the communities in
question, and the Commission, consistent with our ex parte
regulations.\217\ We will look with disfavor on mitigation proposals
that are proposed without sufficient community input. In addition, we
note that effective mitigation will require the Commission to consider,
among other things, the feasibility of proposed mitigation and methods
for ensuring compliance, the timing of proposed mitigation, and, where
useful, a range of potential mitigation options.
---------------------------------------------------------------------------
\217\ 18 CFR 385.2201.
---------------------------------------------------------------------------
92. As described above, in June 2021, the Commission established
OPP to help facilitate public participation in Commission proceedings.
We anticipate that OPP will similarly play an important role in
ensuring that environmental justice communities are able to participate
meaningfully in section 7 certificate proceedings that affect their
interests. We also recognize the adverse impacts that natural gas
infrastructure can have on Native American Tribes and Tribal resources,
and we will continue to review our existing processes to ensure that
the Commission is engaging in effective government-to-government
consultation with Tribes and receiving and considering Tribal input on
proposals.
93. In sum, we recognize that ``environmental justice is not merely
a box to be checked'' \218\ and we commit to ensuring that such
concerns are fully considered in our public interest analysis under NGA
section 7. We expect the principles and concerns outlined above will
guide that consideration as the Commission continues to develop its
environmental justice precedent. Finally, as noted above, we recognize
that Federal agencies, including EPA and CEQ, are in the process of
updating their guidance regarding environmental justice and we will
review and incorporate, as appropriate, any future guidance in our
case-by-case decision-making process.
---------------------------------------------------------------------------
\218\ Friends of Buckingham v. State Air Pollution Control Bd.,
947 F.3d 68, 92 (4th Cir. 2020).
---------------------------------------------------------------------------
B. Assessing Public Benefits and Adverse Effects
94. In deciding whether to issue a certificate of public
convenience and necessity, the Commission must decide whether, on
balance, the project will serve the public interest. In order to make
such a determination, the Commission must consider all of the benefits
of a proposal together with all of the adverse impacts, including the
economic and environmental impacts.
95. As discussed above, under the 1999 Policy Statement, the
Commission would first determine whether, given an applicant's efforts
to mitigate or minimize impacts, there would be any residual adverse
effects on the economic interests of the existing customers of the
pipeline applicant, existing pipelines in the market and their captive
customers, or landowners and communities affected by the proposal. If
so, the Commission would balance the evidence of public benefits to be
achieved by the project against those residual adverse effects on
economic interests. If the benefits outweighed the adverse economic
effects, the Commission would then consider the environmental impacts
associated with the proposal.\219\
---------------------------------------------------------------------------
\219\ 1999 Policy Statement, 88 FERC at 61,745-46.
---------------------------------------------------------------------------
96. As noted above, today, the Commission and staff review the
economic and environmental impacts of projects concurrently. Thus, the
sequential framing of these analyses in the 1999 Policy Statement has
created some confusion and incorrectly conveyed how the Commission
considers economic and environmental impacts. Accordingly, to provide
clarity regarding our decision-making process, we explain that, in
order to determine whether a proposed project is in the public
interest, we must look at the entirety of a proposal and balance all
its benefits against all of its adverse impacts.
97. In assessing the public benefits of a project, the Commission
intends to consider all benefits that will be provided by the project.
The most important consideration in assessing benefits will be the
evidence demonstrating that a project is needed, as discussed in more
detail above. The Commission will also consider any benefits beyond
demand that are alleged by the applicant and supported in the record,
which may include evidence that the project will displace more
pollution-heavy generation sources, facilitate the integration of
renewable energy sources, and/or result in a significant source of jobs
or tax revenues (we note that temporary impacts associated with a
proposal will generally be given less weight).
98. In assessing the adverse impacts of a proposal, we will
consider the range of impacts to: (1) Existing customers of the
pipeline applicant; (2) existing pipelines in the market and their
captive customers; (3) environmental resources; and (4) landowners and
surrounding communities, including environmental justice communities.
In reviewing those adverse impacts, the Commission will carefully
consider the extent to which an applicant will be able to mitigate any
adverse impacts through applicant-proposed measures or additional
measures that the Commission could require.
99. Consistent with the 1999 Policy Statement, we believe that
``[t]he more interests adversely affected or the more adverse impact a
project would have on a particular interest, the greater the showing of
public benefits from the project required to balance the adverse
impact.'' \220\ And, as the Commission did in the 1999 Policy
Statement, we decline to adopt any bright-line standards for how we
will carry out this balancing; \221\ rather, the approach must remain
flexible enough for the Commission to resolve specific cases and take
into account the different interests that must be considered. We do
make clear, however, that there may be proposals denied solely on the
magnitude of a particular adverse
[[Page 11562]]
impact to any of the four interests described above if the adverse
impacts, as a whole, outweigh the benefits of the project and cannot be
mitigated or minimized. On the other hand, there may be proposals that
have significant impacts but are still found to be in the public
interest if the public benefits outweigh those impacts.
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\220\ Id. at 61,749.
\221\ Id.
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V. Applicability of the Updated Certificate Policy Statement
100. A major purpose of this Updated Policy Statement is to provide
clarity and regulatory certainty regarding the Commission's decision-
making process. Therefore, the Updated Policy Statement will not be
applied retroactively to cases where a certificate has already been
issued and investment decisions have been made. However, the Commission
will apply the Updated Policy Statement to any currently pending
applications for new certificates. Applicants will be given the
opportunity to supplement the record and explain how their proposals
are consistent with this Updated Policy Statement, and stakeholders
will have an opportunity to respond to any such filings.
VI. Information Collection Statement
101. The collection of information discussed in the Updated Policy
Statement is being submitted to the Office of Management and Budget
(OMB) for review under section 3507(d) of the Paperwork Reduction Act
of 1995 \222\ and OMB's implementing regulations.\223\ OMB must approve
information collection requirements imposed by agency rules.\224\
Respondents will not be subject to any penalty for failing to comply
with a collection of information if the collection does not display a
valid OMB control number.
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\222\ 44 U.S.C. 3507(d).
\223\ 5 CFR 1320.
\224\ This Updated Policy Statement does not require the
collection of any information, but rather discusses information that
entities may elect to provide. The Commission is following Paperwork
Reduction Act procedures to ensure compliance with that act.
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102. The Commission solicits comments from the public on the
Commission's need for this information, whether the information will
have practical utility, the accuracy of the burden estimates,
recommendations to enhance the quality, utility, and clarity of the
information to be collected, and any suggested methods for minimizing
respondents' burden, including the use of automated information
techniques. Public comments are due May 2, 2022. The burden estimates
are focused on implementing the voluntary information collection
pursuant to this Updated Policy Statement. The Commission asks that any
revised burden estimates submitted by commenters include the details
and assumptions used to generate the estimates.
103. The following estimate of reporting burden is related only to
this Updated Policy Statement.
104. Public Reporting Burden: The collection of information related
to this Updated Policy Statement falls under FERC-537 and impacts the
burden estimates associated with the ``Interstate Certificate and
Abandonment Applications'' component of FERC-537. The Updated Policy
Statement will not impact the burden estimates related to any other
component of FERC-537.\225\ The estimated annual burden \226\ and cost
\227\ follow.
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\225\ The Updated Policy Statement will not impact burden
estimates to the following components of FERC-537: Pipeline Purging/
Testing Exemptions, Blanket Certificates Prior Notice Filings,
Blanket Certificates-Annual Reports, Section 311 Construction-Annual
Reports, Request for Waiver of Capacity Release Regulations,
Interstate and Intrastate Bypass Notice, Blanket Certificates, or
Hinshaw Blanket Certificates.
\226\ Burden is defined as the total time, effort, or financial
resources expended by persons to generate, maintain, retain, or
disclose or provide information to or for a Federal agency. See 5
CFR 1320 for additional information on the definition of information
collection burden.
\227\ Commission staff estimates that the industry's average
hourly cost for this information collection is approximated by the
Commission's average hourly cost (for wages and benefits) for 2021,
or $87.00/hour.
Modifications to FERC-537 (Gas Pipeline Certificates: Construction, Acquisition, and Abandonment)
as a Result of PL18-1-000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual number Total annual burden
Number of of responses Total number of Average burden & hours & total Cost per respondent ($)
respondents per respondent responses cost per response annual cost
(1) (2) (1) * (2) = (3) (4)................ (3) * (4) = (5).... (5) / (1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Interstate Certificate and 40 1 40 880 hours; $76,560 35,200 hours; $76,560 Increase.
Abandonment Applications. Increase. $3,062,400
Increase.
--------------------------------------------------------------------------------------------------------------------------------------------------------
105. Title: FERC-537, Gas Pipeline Certificates: Construction,
Acquisition and Abandonment.
106. Action: Proposed revisions to an existing information
collection.
107. OMB Control No.: 1902-0060.
108. Respondents: Entities proposing natural gas projects under
section 7 of the NGA.
109. Frequency of Information Collection: On occasion.
110. Necessity of Voluntary Information Collection: The
Commission's existing FERC-537 information collection pertains to
regulations implementing section 7 of the NGA, which authorizes the
Commission to issue certificates of public convenience and necessity
for the construction and operation of facilities transporting natural
gas in interstate commerce. The information collected pursuant to this
Updated Policy Statement should help the Commission in making its
public interest determinations.
111. Internal Review: The opportunity to file the information
conforms to the Commission's plan for efficient information collection,
communication, and management within the natural gas pipeline industry.
The Commission has assured itself, by means of its internal review,
that there is specific, objective support for the burden estimates
associated with the opportunity to file the information.
112. Interested persons may provide comments on this information
collection by one of the following methods:
<bullet> Electronic Filing (preferred): Documents must be filed in
acceptable native applications and print-to-PDF, but not in scanned or
picture format.
<bullet> USPS: Federal Energy Regulatory Commission, Office of the
Secretary, 888 First Street NE, Washington, DC 20426.
<bullet> Hard copy other than USPS: Federal Energy Regulatory
Commission, Office of the Secretary, 12225 Wilkins Avenue, Rockville,
Maryland 20852.
[[Page 11563]]
VII. Document Availability
113. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (<a href="http://www.ferc.gov">http://www.ferc.gov</a>). At
this time, the Commission has suspended access to the Commission's
Public Reference Room due to the President's March 13, 2020
proclamation declaring a National Emergency concerning the Novel
Coronavirus Disease (COVID-19).
114. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
115. User assistance is available for eLibrary and the Commission's
website during normal business hours from the Commission's Online
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at
<a href="/cdn-cgi/l/email-protection#e4828196878b8a888d8a81979194948b9690a482819687ca838b92"><span class="__cf_email__" data-cfemail="f89e9d8a9b97969491969d8b8d8888978a8cb89e9d8a9bd69f978e">[email protected]</span></a>, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
<a href="/cdn-cgi/l/email-protection#69191c0b05000a471b0c0f0c1b0c070a0c1b060604290f0c1b0a470e061f"><span class="__cf_email__" data-cfemail="ddada8bfb1b4bef3afb8bbb8afb8b3beb8afb2b2b09dbbb8afbef3bab2ab">[email protected]</span></a>.
By the Commission. Commissioner Danly is dissenting with a separate
statement attached.
Commissioner Christie is dissenting with a separate statement
attached.
Issued: February 18, 2022.
Kimberly D. Bose,
Secretary.
DEPARTMENT OF ENERGY FEDERAL ENERGY REGULATORY COMMISSION
Certification of New Interstate Natural Gas Facilities
Docket No. PL18-1-000
DANLY, Commissioner, dissenting:
1. I dissent from the issuance of the Updated Policy Statement on
Certification of New Interstate Natural Gas Facilities.\1\ Before I
explain my reasons for dissenting, I would like to state from the
outset that I voted for the Commission's most recent revised Notice of
Inquiry \2\ considering changes to its Original Policy Statement.\3\
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\1\ Certification of New Interstate Nat. Gas Facilities, 178
FERC ] 61,107 (2022) (Updated Policy Statement).
\2\ Certification of New Interstate Nat. Gas Facilities, 174
FERC ] 61,125 (2021).
\3\ Certification of New Interstate Nat. Gas Pipeline
Facilities, 88 FERC ] 61,227 (1999), clarified, 90 FERC ] 61,128,
further clarified, 92 FERC ] 61,094 (2000) (Original Policy
Statement).
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2. I cannot, however, support today's issuance because it will, in
combination with the Interim Greenhouse Gas (GHG) Policy Statement,\4\
have profound implications for the ability of natural gas companies to
secure capital, on the timelines for Natural Gas Act (NGA) section 7
\5\ applications to be processed, and on the costs that a pipeline and
its customers will bear as a result of the potentially unmeasurable
mitigation that the majority expects each company to propose when
filing its application \6\ and the possibility of further mitigation
measures added unilaterally by the Commission. As I explain in more
detail below, this policy statement contravenes the purpose of the NGA
which, as the Supreme Court has held, is to ``encourage the orderly
development of plentiful supplies of . . . natural gas at reasonable
prices.'' \7\
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\4\ Consideration of Greenhouse Gas Emissions in Nat. Gas
Infrastructure Project Reviews, 178 FERC ] 61,108 (2022) (Interim
GHG Policy Statement). I note that today's issuance in Docket No.
PL21-3-000 ``is subject to revision'' and is described as an
``interim'' policy statement. Id. P 1.
\5\ 15 U.S.C. 717f.
\6\ See Updated Policy Statement, 178 FERC ] 61,107 at P 74
(``[W]e expect applicants to propose measures for mitigating
impacts, and we will consider those measures--or the lack thereof--
in balancing adverse impacts against the potential benefits of a
proposal.'').
\7\ NAACP v. FPC, 425 U.S. 662, 669-70 (1976) (citations
omitted) (NAACP); accord Myersville Citizens for a Rural Cmty., Inc.
v. FERC, 783 F.3d 1301, 1307 (D.C. Cir. 2015) (quoting NAACP, 425
U.S. at 669-70) (Myersville).
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I. The Commission's Jurisdiction and the Public Convenience and
Necessity Standard Are Not as Broad as the Updated Policy Statement
Suggests
3. As an initial matter, the Commission ``is a `creature of
statute,' having `no constitutional or common law existence or
authority, but only those authorities conferred upon it by Congress.'
'' \8\ The applicable statute is the NGA, and the statutory standard
applicable to NGA section 7(c) certificate applications \9\ is whether
a proposed project ``is or will be required by the present or future
public convenience and necessity.'' \10\
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\8\ Atl. City Elec. Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2002)
(quoting Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001))
(emphasis in original).
\9\ 15 U.S.C. 717f(c).
\10\ Id. Sec. 717f(e) (``[A] certificate shall be issued to any
qualified applicant therefor, . . . if it is found that the
applicant is able and willing properly to do the acts and to perform
the service proposed and to conform to the provisions of this
chapter and the requirements, rules, and regulations of the
Commission thereunder, and that the proposed service, sale,
operation, construction, extension, or acquisition, to the extent
authorized by the certificate, is or will be required by the present
or future public convenience and necessity; otherwise such
application shall be denied.'') (emphasis added); see Okla. Nat. Gas
Co. v. FPC, 257 F.2d 634, 639 (D.C. Cir. 1958) (``The granting or
denial of a certificate of public convenience and necessity is a
matter peculiarly within the discretion of the Commission.'').
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4. Notably, public convenience and necessity is not anywhere
defined in the language of the NGA.\11\ That phrase is famously
ambiguous, and the statute fails to provide factors to be weighed in
arriving at a determination that a proposed project ``is or will be
required by the present or future public convenience and necessity.''
\12\ Accordingly, ``the Natural Gas Act `vests the Commission with
broad discretion to invoke its expertise in balancing competing
interests and drawing administrative lines.' '' \13\ This does not, of
course, mean that we are wholly without guideposts in construing the
meaning of the public convenience and necessity standard. As recognized
by my colleagues, the Supreme Court has found that NGA section ``7(e)
requires the Commission to evaluate all factors bearing on the public
interest.'' \14\ This finding, however, cannot not be read in a vacuum.
The Court has explained that the inclusion of the phrase ``public
interest'' in a statute is not ``a broad license to promote the general
public welfare''--instead, it ``take[s] meaning from the purposes of
the regulatory legislation.'' \15\ Thus, we turn, as we must, to the
purpose of the NGA: ``to encourage the orderly development of plentiful
supplies of . . . natural gas at reasonable prices.'' \16\ Any
balancing under the public convenience and necessity standard should
``take meaning'' from that purpose.
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\11\ Cf. ICC v. Parker, 326 U.S. 60, 65 (1945) (``Public
convenience and necessity is not defined by the statute. The nouns
in the phrase possess connotations which have evolved from the half-
century experience of government in the regulation of
transportation.''); see generally S. Rep. No. 75-1162 at 5 (1937)
(recognizing similarities in the provisions requiring certificates
for public convenience and necessity under the other statutes, e.g.,
the Interstate Commerce Act).
\12\ 15 U.S.C. 717f(e).
\13\ Envtl. Def. Fund v. FERC, 2 F.4th 953, 975 (D.C. Cir. 2021)
(internal quotation marks omitted).
\14\ Updated Policy Statement, 178 FERC ] 61,107 at P 4 n.6
(quoting Atl. Ref. Co. v. Pub. Serv. Comm'n of N.Y., 360 U.S. 378,
391 (1959)).
\15\ NAACP, 425 U.S. at 669.
\16\ Id. at 669-70; accord Myersville, 783 F.3d at 1307 (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.
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5. We also know that ``[n]othing contained in [NGA section 7] shall
be construed as a limitation upon the power of the Commission to grant
[[Page 11564]]
certificates of public convenience and necessity for service of an area
already being served by another natural-gas company.'' \17\ Therefore,
the Commission is not barred from finding a proposed project required
by the public convenience and necessity when it is in an area that is
already served by another company.\18\
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\17\ 15 U.S.C. 717f(g).
\18\ See Panhandle E. Pipe Line Co. v. FPC, 169 F.2d 881, 884
(D.C. Cir. 1948) (``[N]othing in the Natural Gas Act suggests that
Congress thought monopoly better than competition or one source of
supply better than two, or intended for any reason to give an
existing supplier of natural gas for distribution in a particular
community the privilege of furnishing an increased supply.'').
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6. Another consideration relevant to the Commission's evaluation of
the public interest is our jurisdiction and, specifically, which areas
of regulation Congress identified as being reserved to states--and thus
outside of our jurisdiction. NGA section 1(b) sets forth that division
of jurisdiction, providing that,
[t]he provisions of [the NGA] 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.\19\
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\19\ 15 U.S.C. 717(b) (emphasis added).
The Commission's authority therefore extends to: (1) The
``transportation of natural gas in interstate commerce,'' (2) the
``sale in interstate commerce of natural gas for resale,'' and (3)
``natural-gas companies engaged in such transportation or sale.'' \20\
Exempted from our jurisdiction are production, gathering and local
distribution.\21\ From these exemptions, it may be gleaned that the
Commission does not have jurisdiction over the ``gas once it moves
beyond the high-pressure mains into the hands of an end user.'' \22\
Another exemption from federal regulation is contained in NGA section
1(c), which states:
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\20\ Id.
\21\ See id.
\22\ Pub. Utils. Comm'n of Cal. v. FERC, 900 F.2d 269, 277 (D.C.
Cir. 1990).
The provisions of this chapter shall not apply to any person
engaged in or legally authorized to engage in the transportation in
interstate commerce or the sale in interstate commerce for resale,
of natural gas received by such person from another person within or
at the boundary of a State if all the natural gas so received is
ultimately consumed within such State, or to any facilities used by
such person for such transportation or sale, provided that the rates
and service of such person and facilities be subject to regulation
by a State commission.\23\
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\23\ 15 U.S.C. 717(c).
By declaring the foregoing exemptions from federal regulation,
Congress has carefully delineated the limits of the Commission's
jurisdiction.\24\
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\24\ See FPC v. Transcon. Gas Pipe Line Corp., 365 U.S. 1, 8
(1961) (Transco) (``Congress, in enacting the Natural Gas Act, did
not give the Commission comprehensive powers over every incident of
gas production, transportation, and sale. Rather, Congress was
`meticulous' only to invest the Commission with authority over
certain aspects of this field leaving the residue for State
regulation.'') (citation omitted); see also FPC v. Panhandle E. Pipe
Line Co. 337 U.S. 498, 502-03 (1949) (``[S]uffice it to say that the
Natural Gas Act did not envisage federal regulation of the entire
natural-gas field to the limit of constitutional power. Rather it
contemplated the exercise of federal power as specified in the Act,
particularly in that interstate segment which the states were
powerless to regulate because of the Commerce Clause of the Federal
Constitution.'') (footnote omitted).
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7. These limits on the Commission's jurisdiction are not extended
by the National Environmental Policy Act (NEPA).\25\ In fact, NEPA
cannot extend our jurisdiction because NEPA is not a means of
``mandating that agencies achieve particular substantive environmental
results''; \26\ rather, it 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.'' \27\ Indeed, ``NEPA not only does not require
agencies to discuss any particular mitigation plans that they might put
in place, it does not require agencies--or third parties--to effect
any.'' \28\ It is necessary to acknowledge the limited, procedural
nature of NEPA's requirements since it almost appears as though some of
my colleagues have become convinced that it is necessary to ensure that
environmental impacts are mitigated before one can make a finding that
a proposed project is required by the public convenience and
necessity.\29\ Neither NEPA nor the NGA establishes such a requirement.
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\25\ See Nat. Res. Def. Council, Inc. v. EPA, 822 F.2d 104, 129
(D.C. Cir. 1987) (``NEPA, as a procedural device, does not work a
broadening of the agency's substantive powers.'') (citations
omitted); Cape May Greene, Inc. v. Warren, 698 F.2d 179, 188 (3d
Cir. 1983) (``The National Environmental Policy Act does not expand
the jurisdiction of an agency beyond that set forth in its organic
statute.'') (citations omitted); Gage v. U.S. Atomic Energy Comm'n,
479 F.2d 1214, 1220 n.19 (D.C. Cir. 1973) (``NEPA does not mandate
action which goes beyond the agency's organic jurisdiction.'')
(citation omitted).
\26\ Marsh v. Or. Nat. Res. Council, 490 U.S. 360, 371 (1989);
accord Robertson v. Methow Valley Citizens Council, 490 U.S. 332,
350 (1989) (Methow Valley) (``[I]t is now well settled that NEPA
itself does not mandate particular results, but simply prescribes
the necessary process.''); see also Baltimore Gas & Elec. Co. v.
Nat. Res. Def. Council, Inc., 462 U.S. 87, 97 (1983) (``Congress in
enacting NEPA . . . did not require agencies to elevate
environmental concerns over other appropriate considerations.'').
\27\ Dep't of Transp. v. Pub. Citizen, 541 U.S. 752, 756-57
(2004) (citation omitted); accord Winter v. Nat. Res. Def. Council,
Inc., 555 U.S. 7, 23 (2008) (``NEPA imposes only procedural
requirements to `ensur[e] that the agency, in reaching its decision,
will have available, and will carefully consider, detailed
information concerning significant environmental impacts.' '')
(quoting Methow Valley, 490 U.S. at 349); see also Vt. Yankee
Nuclear Power Corp. v. Nat. Res. Def. Council, Inc., 435 U.S. 519,
558 (1978) (``NEPA does set forth significant substantive goals for
the Nation, but its mandate to the agencies is essentially
procedural.'') (citations omitted).
\28\ Citizens Against Burlington, Inc. v. Busey, 938 F.2d 190,
206 (D.C. Cir. 1991) (citing Methow Valley, 490 U.S. at 353 & n.16).
\29\ See Updated Policy Statement, 178 FERC ] 61,107 at P 74
(``We will consider environmental impacts and potential mitigation
in both our environmental reviews under NEPA and our public interest
determinations under the NGA. The Commission expects applicants to
structure their projects to avoid, or minimize, potential adverse
environmental impacts.''); id. (``Should we deem an applicant's
proposed mitigation of impacts inadequate to enable us to reach a
public interest determination, we may condition the certificate to
require additional mitigation.''); id. P 79 (``[W]e clarify that our
consideration of impacts to communities surrounding a proposed
project will include an assessment of impacts to any environmental
justice communities and of necessary mitigation to avoid or lessen
those impacts.'').
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8. And, any attempt to justify such action through the Commission's
conditioning authority is unsupported.\30\ Under its conditioning
authority, ``[t]he Commission shall have the power to attach to the
issuance of the certificate and to the exercise of the rights granted
thereunder such reasonable terms and conditions as the public
convenience and necessity may require.'' \31\ But the Commission's
conditioning authority cannot be used to impose conditions beyond the
Commission's jurisdiction.\32\ Nor can the Commission find support
under NEPA for its expectation that applicants propose mitigation
measures in order for a project to be deemed required by the public
convenience and necessity.\33\
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\30\ But see id. P 74 (concluding because the Commission's
conditioning authority is broad, if the Commission determines that
the applicant's proposed mitigation of impacts are inadequate, the
Commission has the authority to condition the certificate to require
additional mitigation).
\31\ 15 U.S.C. 717f(e).
\32\ See Richmond Power & Light of City of Richmond, Ind. v.
FERC, 574 F.2d 610, 620 (D.C. Cir. 1978) (``What the Commission is
prohibited from doing directly it may not achieve by indirection.'')
(footnote omitted).
\33\ See Methow Valley, 490 U.S. at 352-53 (``There is a
fundamental distinction, however, between a requirement that
mitigation be discussed in sufficient detail to ensure that
environmental consequences have been fairly evaluated, on the one
hand, and a substantive requirement that a complete mitigation plan
be actually formulated and adopted, on the other. . . . Even more
significantly, it would be inconsistent with NEPA's reliance on
procedural mechanisms--as opposed to substantive, result-based
standards--to demand the presence of a fully developed plan that
will mitigate environmental harm before an agency can act.'')
(citing Baltimore Gas & Elec. Co., 462 U.S. at 100 (``NEPA does not
require agencies to adopt any particular internal decisionmaking
structure'')).
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[[Page 11565]]
II. A Number of the Changes to the Certificate Policy Statement Are
Misguided
<bullet> Changes in the Commission's Need Determination
9. In the Original Policy Statement, the Commission stated that, in
evaluating the need for a project, it would:
consider all relevant factors reflecting on the need for the
project. These might include, but would not be limited to, precedent
agreements, demand projections, potential cost savings to consumers,
or a comparison of projected demand with the amount of capacity
currently serving the market. The objective would be for the
applicant to make a sufficient showing of the public benefits of its
proposed project to outweigh any residual adverse effects discussed
below.\34\
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\34\ Original Policy Statement, 88 FERC ] 61,227 at 61,747.
Although the Commission stated in its Original Policy Statement
that it would consider other factors, the Commission has also
``explained that the [Original] Policy Statement does not require a
certain percentage of a proposed project's capacity be subscribed, and
that with respect to affiliate shippers, `it is . . . Commission policy
to not look beyond precedent or service agreements to make judgments
about the needs of individual shippers.' '' \35\
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\35\ NEXUS Gas Transmission, LLC, 172 FERC ] 61,199, at P 5
(2020) (citation omitted).
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10. In the Updated Policy Statement, the Commission now is revising
how it determines need. The Updated Policy Statement explains that
``[i]n determining whether to issue a certificate of public convenience
and necessity, the Commission will weigh the public benefits of a
proposal, the most important of which is the need that will be served
by the project, against its adverse impacts.'' \36\ The Commission
acknowledges that its prior reliance on precedent agreements to
determine need has been upheld by courts,\37\ but then proclaims that
``we cannot adequately assess project need without also looking at
evidence beyond precedent agreements.'' \38\ An expectation is then
established that applicants continue to provide precedent agreements
but ``the existence of precedent agreements may not be sufficient in
and of themselves to establish need for the project.'' \39\
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\36\ Updated Policy Statement, 178 FERC ] 61,107 at P 52
(emphasis added).
\37\ See id. P 54 (citing Minisink Residents for Envtl. Pres. &
Safety v. FERC, 762 F.3d 97, 110 n.10 (D.C. Cir. 2014) (noting that
the 1999 Policy Statement ``permits'' but does not ``require[ ]''
the Commission to ``look[ ] beyond the market need reflected by the
applicant's existing contracts with shippers'')).
\38\ Id.
\39\ Id. P 54 (listing other considerations that it views as
relevant to a need determination, including whether the agreements
were entered into before or after an open season, the results of the
open season, the number of bidders, whether the agreements were
entered into in response to a local distribution company or
generator request for proposals (RFP), the details of any such RFP
process, demand projections underlying the capacity subscribed,
estimated capacity utilization rates, potential cost savings to
customers, regional assessments, and filings or statements from
State regulatory commissions or local distribution companies
regarding the proposed project).
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11. The Commission underscores what it views as necessary for the
Commission to determine need for all categories of proposed projects:
``specific information detailing how the gas to be transported by the
proposed project will ultimately be used,'' i.e., the end use and,
``why the project is needed to serve that use.'' \40\ And if the
applicant does not have information regarding the intended end use?
Applicants are ``encouraged'' to turn to their shippers to obtain
it.\41\ In the absence of such information, the Commission suggests
that the applicant may not satisfy its burden to demonstrate need for
the proposed project.\42\ The projected end use and an explanation of
the reasons why the project is needed to serve that use are not the
only information the Commission requests--``[f]or all categories of
proposed projects,'' the majority also ``encourage[s] applicants to
provide specific information detailing . . . the expected utilization
rate of the proposed project.'' \43\ The majority also suggests types
of ``evidence'' for various categories of projects.\44\
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\40\ Id. P 55.
\41\ Id.
\42\ See id.
\43\ Id.
\44\ See id. PP 55-59.
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12. And when precedent agreements are with an affiliate of the
applicant, the majority states that those precedent agreements, will
generally not be sufficient to demonstrate need.\45\
---------------------------------------------------------------------------
\45\ Id. P 60.
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13. I agree that, as a legal matter, the Commission may take into
account considerations other than precedent agreements in its need
determination. I also agree that there may be circumstances--such as
when there is evidence of self-dealing in the execution of a precedent
agreement with an affiliated shipper--where ``the existence of
precedent agreements may not be sufficient in and of themselves to
establish need for the project.'' \46\
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\46\ Id. P 54. I am generally skeptical of affiliate
transactions and think that in most circumstances, the Commission
should scrutinize agreements with an affiliate. As I have previously
explained, I agree with the U.S. Court of Appeals for District of
Columbia Circuit's decision to remand the Commission's orders and
the court's explanation for doing so in Environmental Defense Fund
v. FERC, 2 F.4th 953. See Spire STL Pipeline LLC, 176 FERC ] 61,160
(2021) (Danly, Comm'r, dissenting at P 9).
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14. To the extent, however, that today's order suggests that the
Commission must look beyond precedent agreements in every circumstance
to determine need, I disagree. In my view, precedent agreements are
strong evidence of need and the Commission need not look further in
most circumstances. As my colleagues acknowledge, courts have upheld on
numerous occasions the Commission's application of its Original Policy
Statement and the Commission's reliance on precedent agreements to
support multiple findings of market need.\47\
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\47\ See, e.g., City of Oberlin, Ohio v. FERC, 937 F.3d 599, 606
(D.C. Cir. 2019) (``[T]his Court has also recognized that `it is
Commission policy to not look behind precedent or service agreements
to make judgments about the needs of individual shippers.' '')
(citation omitted); Minisink Residents for Envtl. Pres. & Safety v.
FERC, 762 F.3d at 111 (``Petitioners identify nothing in the policy
statement or in any precedent construing it to suggest that it
requires, rather than permits, the Commission to assess a project's
benefits by looking beyond the market need reflected by the
applicant's existing contracts with shippers. To the contrary, the
policy statement specifically recognizes that such agreements
`always will be important evidence of demand for a project.' '')
(quoting Original Policy Statement, 88 FERC ] 61,227 at 61,748); see
also Myersville Citizens for a Rural Cmty., Inc. v. FERC, 783 F.3d
1301, 1311 (D.C. Cir. 2015) (explaining that ``[f]or a variety of
reasons related to the nature of the market, `it is Commission
policy to not look behind precedent or service agreements to make
judgments about the needs of individual shippers.' . . . In keeping
with its policy, the Commission concluded that the evidence that the
Project was fully subscribed was adequate to support the finding of
market need.'') (citation omitted).
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15. In terms of precedent agreements with affiliates, the
Commission recently received guidance in the form of the narrow holding
in Environmental Defense Fund v. FERC.\48\ There, the court found the
Commission's public convenience and necessity determination to be
arbitrary and capricious due to the Commission's
---------------------------------------------------------------------------
\48\ Envtl. Def. Fund v. FERC, 2 F.4th 953.
rel[iance] solely on a precedent agreement to establish market need
for a proposed pipeline when (1) there was a single precedent
agreement for the pipeline; (2) that precedent agreement was with an
affiliated shipper; (3) all parties agreed that projected demand for
natural gas in the area to be served by the
[[Page 11566]]
new pipeline was flat for the foreseeable future; and (4) the
Commission neglected to make a finding as to whether the
construction of the proposed pipeline would result in cost savings
or otherwise represented a more economical alternative to existing
pipelines.\49\
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\49\ Id. at 976.
That case does not stand for the proposition that in every
circumstance, the Commission must always look beyond the precedent
agreements. Instead, that case should be read as a failure on the part
of the Commission to engage in reasoned decision making based on the
facts presented.
16. Next, I disagree with the majority's position that the
Commission should weigh end use in its determination of need. I agree
with Enbridge Gas Pipeline that ``[p]rioritizing certain end uses in
determining project need would be inconsistent with the Commission's
policies of open access, open seasons and awarding capacity to those
that value the capacity the most.'' \50\ More importantly, the
Commission does not have jurisdiction over the end use of the gas and
has been purposefully deprived of its upstream and downstream
authorities by Congress. The breadth of the subject matters that inform
our public interest determinations must be informed by the limits of
our jurisdiction.
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\50\ Enbridge Gas Pipelines May 26, 2021 Comments at 42.
``[U]nder the Commission's open-access regulatory regime, pipelines
must provide transportation service without `undue discrimination or
preference of any kind.' '' NEXUS Gas Transmission, LLC, 172 FERC ]
61,199, at P 17 (2020) (quoting 18 CFR 284.7(b)). The Commission's
new consideration of the intended end use of the gas and why the gas
is needed to serve that use may also cause tension with NGA section
4. Updated Policy Statement, 178 FERC ] 61,107 at P 52. NGA section
4(b) states that ``[n]o natural-gas company shall, with respect to
any transportation or sale of natural gas subject to the
jurisdiction of the Commission, (1) make or grant any undue
preference or advantage to any person or subject any person to any
undue prejudice or disadvantage, or (2) maintain any unreasonable
difference in rates, charges, service, facilities, or in any other
respect, either as between localities or as between classes of
service.'' 15 U.S.C. 717c(b).
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17. I recognize that in Transco the Supreme Court stated that ``
`end-use' . . . was properly of concern to the Commission.'' \51\ As
commenters observe,\52\ however, the Transco decision was made prior to
Congress' enactment of the Natural Gas Policy Act of 1978 (NGPA) \53\
and the Natural Gas Wellhead Decontrol Act of 1989 (Wellhead Decontrol
Act).\54\ These later enactments are instructive as to whether the
Commission should consider end use as part of its public convenience
and necessity determination.
---------------------------------------------------------------------------
\51\ Transco, 365 U.S. at 22.
\52\ See, e.g., TC Energy Corporation May 26, 2021 Comments at
12-13 (explaining that after the Supreme Court's Transco decision
``was issued in 1961, Congress passed the NGPA, the Wellhead
Decontrol Act, EPAct 1992, and the Commission issued Orders Nos. 636
and 637. These statutes and regulatory orders fundamentally altered
the natural gas markets by acting to facilitate the development of
competitive natural gas markets served by competitive interstate
natural gas transportation.''); id. (``Under the current regulatory
framework, there is no basis for the Commission to deny a
certificate application based on end use, because the current
framework requires equal access to a plentiful gas supply for all
buyers and sellers. The end use of natural gas is outside the
objectives of the current statutory framework, and the Commission
should not take end use into consideration when assessing the public
need for a pipeline project under the NGA.''); Boardwalk Pipeline
Partners, LP May 26, 2021 Comments at 34 (``FPC v. Transco was
decided prior to the NGPA's and Wellhead Decontrol Act's creation of
a competitive natural gas market that allows all consumers to
benefit from the United States' plentiful gas supplies . . . .
[G]iven all of the changes that have occurred over the past 60
years'' and ``[u]nder the current open-access regime, there is no
legal basis for the Commission to deny a certificate application
based on end use.'') (emphasis omitted).
\53\ 15 U.S.C. 3301-3432.
\54\ Natural Gas Wellhead Decontrol Act of 1989, Public Law 101-
60, 103 Stat. 157 (1989).
---------------------------------------------------------------------------
18. The NGPA ``was designed to phase out regulation of wellhead
prices charged by producers of natural gas, . . . to `promote gas
transportation by interstate and intrastate pipelines' for third
parties'' \55\ and also ``to provide investors with adequate incentives
to develop new sources of supply.'' \56\ Later, the enactment of the
Wellhead Decontrol Act resulted in deregulating upstream natural gas
production, and the legislative history suggests the enactment would
serve to encourage competition of natural gas at the wellhead.\57\ In
combination, these acts effectively deprived the Commission of
authority upstream of the jurisdictional pipeline.
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\55\ Gen. Motors Corp. v. Tracy, 519 U.S. 278, 283 (1997)
(quoting 57 FR 13271 (1992)).
\56\ Pub. Serv. Comm'n of State of N.Y. v. Mid-Louisiana Gas
Co., 463 U.S. 319, 334 (1983).
\57\ See S. Rep. No. 101-39, at 1 (1989) (``[T]he purpose . . .
is to promote competition for natural gas at the wellhead in order
to ensure consumers an adequate and reliable supply of natural gas
at the lowest reasonable price.''); H.R. Rep. No. 101-29, at 6
(1989) (``All sellers must be able to reasonably reach the highest-
bidding buyer in an increasingly national market. All buyers must be
free to reach the lowest-selling producer, and obtain shipment of
its gas to them on even terms with other supplies.'').
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19. In 1987, Congress repealed sections of the Power Plant and
Industrial Fuel Use Act of 1978 (Fuel Use Act), further deregulating
downstream considerations. My former colleague, Commissioner McNamee
previously explained that the Fuel Use Act had ``restricted the use of
natural gas in electric generation so as to conserve it for other
uses'' and ``[w]ith the repeal of the Fuel Use Act, Congress made clear
that natural gas could be used for electric generation and that the
regulation of the use of natural gas by power plants unnecessary.''
\58\ A House report stated:
---------------------------------------------------------------------------
\58\ Adelphia Gateway, LLC, 169 FERC ] 61,220 (2019) (McNamee,
Comm'r, concurring at P 36).
By amending [the Fuel Use Act], H.R. 1941 will remove artificial
government restrictions on the use of oil and gas; allow energy
consumers to make their own fuel choices in an increasingly
deregulated energy marketplace; encourage multifuel competition
among oil, gas, coal, and other fuels based on their price,
availability, and environmental merits; preserve the `coal option'
for new baseload electric powerplants which are long-lived and use
so much fuel; and provide potential new markets for financially
distressed domestic oil and gas producers.\59\
---------------------------------------------------------------------------
\59\ H.R. Rep. 100-78, at 2 (1987).
These later, deregulatory enactments were not at play in Transco.
And I agree that ``the current framework requires equal access to a
plentiful gas supply for all buyers and sellers.'' \60\ Taking the
foregoing into account, I am not convinced that the Commission has
authority to deny a certificate of public convenience and necessity on
the basis of end use, and the Commission should not consider end use in
its need determination.
---------------------------------------------------------------------------
\60\ TC Energy Corporation May 26, 2021 Comments at 13.
---------------------------------------------------------------------------
b. Consideration of Adverse Effects
20. The Commission explains in its Updated Policy Statement that it
will consider four categories of adverse impacts from the construction
and operation of new projects: (1) The interests of the applicant's
existing customers; (2) the interests of existing pipelines and their
captive customers; (3) environmental interests; and (4) the interests
of landowners and surrounding communities, including environmental
justice communities.\61\ The Commission also states that it may deny an
application based on any of the foregoing types of adverse impacts.\62\
Further, the Commission will ``consider environmental impacts and
potential mitigation in both our environmental reviews under NEPA and
our public interest determinations under the NGA.'' \63\ And the
Commission ``expects applicants to structure their projects to avoid,
or minimize, potential adverse environmental impacts.'' \64\
---------------------------------------------------------------------------
\61\ Updated Policy Statement, 178 FERC ] 61,107 at P 62.
\62\ Id.
\63\ Id. P 74 (emphasis added).
\64\ Id.
---------------------------------------------------------------------------
21. First, regarding the interests of the applicant's existing
customers, the Commission announces that while our
[[Page 11567]]
policy of no financial subsidies remains unchanged, the Commission will
no longer treat this as a threshold requirement.\65\ This
reprioritization is fine; it is merely a policy choice with no obvious
legal infirmity.
---------------------------------------------------------------------------
\65\ Id. P 63.
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22. Next, the Commission turns to its considerations of existing
pipelines and their customers with an emphasis on the prevention of
overbuilding. In an order clarifying the Original Policy Statement, the
Commission discussed the consideration of overbuilding and explained
that ``[s]ending the wrong price signals to the market can lead to
inefficient investment and contracting decisions which can cause
pipelines to build capacity for which there is not a demonstrated
market need,'' and that ``[s]uch overbuilding, in turn, can exacerbate
adverse environmental impacts, distort competition between pipelines
for new customers, and financially penalize existing customers of
expanding pipelines and customers of the pipelines affected by the
expansion.'' \66\ I agree that the concern of overbuilding is worthy of
consideration in the Commission's balancing and consistent with the
purpose of ``encourag[ing] the orderly development of plentiful
supplies of . . . natural gas at reasonable prices.'' \67\
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\66\ Certification of New Interstate Nat. Gas Pipeline
Facilities, 90 FERC ] 61,128, at 61,391.
\67\ NAACP, 425 U.S. at 670 (emphasis added).
---------------------------------------------------------------------------
23. The Commission also states that ``[t]o the extent that a
proposed project is designed to substantially serve demand already
being met on existing pipelines, that could be an indication of
potential overbuilding.'' \68\ In my view, the Commission should weigh
this consideration with NGA section 7(g) in mind, which provides that
``[n]othing contained in [NGA section 7] shall be construed as a
limitation upon the power of the Commission to grant certificates of
public convenience and necessity for service of an area already being
served by another natural-gas company.'' \69\ In considering whether a
proposed project is designed to substantially serve demand that is
already met, the Commission should also consider whether the proposed
project would allow for further competition, send appropriate price
signals and improve the efficiency or reliability of service to
existing customers. This is worth noting because of the statement in
today's order that states that ``[t]he Commission may deny an
application based on any of these types of adverse impacts,'' \70\
including impacts to existing pipelines and their customers.
---------------------------------------------------------------------------
\68\ Updated Policy Statement, 178 FERC ] 61,107 at P 69.
\69\ 15 U.S.C. 717f(g).
\70\ Updated Policy Statement, 178 FERC ] 61,107 at P 62
(emphasis added); see also id. P 99 (``[T]here may be proposals
denied solely on the magnitude of a particular adverse impact to any
of the four interests described above if the adverse impacts, as a
whole, outweigh the benefits of the project and cannot be mitigated
or minimized.'').
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24. Third, the majority addresses environmental impacts, stating:
``While the 1999 Policy Statement focused on economic impacts, the
consideration of environmental impacts is an important part of the
Commission's responsibility under the NGA to evaluate all factors
bearing on the public interest.'' \71\ As explained by the majority,
the Original Policy Statement ``included an analytical framework for
how the Commission would evaluate the effects of certificating new
projects on economic interests,'' and it ``did not describe how the
Commission would consider environmental interests in its decision-
making process and, more specifically, how it would balance these
interests with the economic interests of a project.'' \72\ The
Commission now adjusts that framework to include environmental impacts
as a consideration in its Updated Policy Statement.
---------------------------------------------------------------------------
\71\ Id. P 72 (citation omitted).
\72\ Id. P 71.
---------------------------------------------------------------------------
25. The Commission explains that it will consider environmental
impacts and potential mitigation in both our environmental reviews
under NEPA and our public interest determinations under the NGA.\73\
The majority ``expect[s] applicants to propose measures for mitigating
impacts,'' for consideration in the Commission's balancing of adverse
impacts against the potential benefits of a proposal.\74\ The
Commission may condition the certificate with further mitigation.\75\
Moreover, the Commission states that it may ``deny an application based
on . . . environmental impacts, if the adverse impacts as a whole
outweigh the benefits of the project and cannot be mitigated or
minimized.'' \76\ Finally, the majority indicates its intent when
making its public convenience and necessity determination to fully
consider climate impacts.\77\
---------------------------------------------------------------------------
\73\ Id. P 74.
\74\ Id.
\75\ Id.
\76\ Id.
\77\ Id. P 76.
---------------------------------------------------------------------------
26. I discuss the reasons why I disagree with the majority's
Interim GHG Policy Statement in my dissent to that order.\78\ In terms
of the change from an economic focus in the Original Policy Statement,
my view is that the Commission should retain its economic framework as
the basis of its policy statement. I am concerned that several of the
changes made in today's Updated Policy Statement include issues outside
the scope of that which the Commission is able to consider under the
NGA. Though time has passed since the NGA's enactment, it is Congress'
role to amend the statute should it see fit to include in the
Commission's authority matters such as the conditioning of certificates
to mitigate GHG emissions. Congress has done so before and could do so
again.\79\ To restate the approach that should be taken to determine
the public convenience and necessity: Any balancing under that standard
must ``take meaning'' from the interests articulated in the NGA.
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\78\ See Interim GHG Policy Statement, 178 FERC ] 61,108 (Danly,
Comm'r, dissenting).
\79\ See Whitman v. Am. Trucking Ass'ns, Inc., 531 U.S. 457, 468
(2001) (``Congress, we have held, does not alter the fundamental
details of a regulatory scheme in vague terms or ancillary
provisions--it does not, one might say, hide elephants in
mouseholes.'') (citations omitted).
---------------------------------------------------------------------------
27. Although courts have recognized that the Commission's NGA
section 7(e) ``conditioning authority is `extremely broad,' '' \80\
such authority is not without limit. ``The Commission may not, however,
when it lacks the power to promote the public interest directly, do so
indirectly by attaching a condition to a certificate that is, in
unconditional form, already in the public convenience and necessity.''
\81\ There have been circumstances where the courts have found the
Commission exceeded its conditioning authority.\82\ Its use must be
[[Page 11568]]
consistent with the other provisions of the NGA and the Commission may
not use conditions under the guise of acting in the public interest in
order to do something it would otherwise not have authority to do.
---------------------------------------------------------------------------
\80\ ANR Pipeline Co. v. FERC, 876 F.2d 124, 129 (D.C. Cir.
1989) (citation omitted).
\81\ Nat'l Fuel Gas Supply Corp. v. FERC, 909 F.2d 1519, 1522
(D.C. Cir. 1990) (citing Sunray Mid-Continent Oil Co. v. FPC, 364
U.S. 137, 152 (1960) (``once want of power to do this directly were
established, the existence of power to achieve the same end
indirectly through the conditioning power might well be doubted'');
Richmond Power & Light v. FERC, 574 F.2d 610, 620 (D.C. Cir. 1978)
(the Commission may not achieve indirectly through conditioning
power of Federal Power Act what it is otherwise prohibited from
achieving directly)); see also Am. Gas Ass'n v. FERC, 912 F.2d 1496,
1510 (D.C. Cir. 1990) (``[T]he Commission may not use its section 7
conditioning power to do indirectly . . . things that it cannot do
at all.'').
\82\ See, e.g., Nat'l Fuel Gas Supply Corp. v. FERC, 909 F.2d at
1520, 1522 (D.C. Cir. 1990) (finding that the Commission exceeded
the scope of its NGA section 7(e) authority in conditioning the
approval of an off-system sales certificate upon certificate
holder's acceptance of a blanket transportation certificate because
``the Commission squarely found that National's proposed `sales are
required by the public convenience and necessity,' quite apart from
conditioning their certification upon the pipeline's filing for a
blanket transportation certificate.''); N. Nat. Gas Co., Div. of
InterNorth v. FERC, 827 F.2d 779, 792-93 (D.C. Cir. 1987) (granting
rehearing en banc, reaffirming the holding in Panhandle E. Pipe Line
Co. v. FERC, 613 F.2d 1120, 1133 (D.C. Cir. 1979), which provides
``that `the Commission does not have authority under section 7 to
compel flow-through of revenues to customers of services not under
consideration in that proceeding for certification,' '' and vacating
a condition that violates that holding).
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28. There are also practical considerations in the Commission
finding in today's policy statement that ``[s]hould [the Commission]
deem an applicant's proposed mitigation of impacts inadequate to enable
us to reach a public interest determination, we may condition the
certificate to require additional mitigation.'' \83\ The costs that
attend the proposed mitigation of GHG emissions may be unmeasurable,
may not be readily apparent, and may also be more than the natural gas
companies and its shippers are willing or able to bear. There will
perhaps be difficulty in measuring the costs of conditions, such as
market-based mitigation,\84\ when the costs are determined based on a
changing market. For instance, the cost of purchasing renewable energy
credits may be different at the time an application is filed in
comparison to when the certificate is issued. And there is no guarantee
that the potentially extraordinary costs incurred by a pipeline to
comply with the Commission's public interest determination will be
recovered in the pipeline's rates.\85\ These practical considerations
have not been taken into account by the Commission. Without these
considerations, I am not convinced that the Commission has engaged in
reasoned decision making.
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\83\ Updated Policy Statement, 178 FERC ] 61,107 at P 74.
\84\ See Interim GHG Policy Statement, 178 FERC ] 61,108 at PP
114-115 (encouraging project sponsors to propose mitigation
measures, stating that project sponsors ``are free to propose any
type of mitigation mechanism,'' and providing the following examples
of market-based mitigation: ``[the] purchase [of] renewable energy
credits, participat[ion] in a mandatory compliance market (if
located in a State that requires participation in such a market), or
participat[ion] in a voluntary carbon market'').
\85\ See id. P 129 (``Pipelines may seek to recover GHG
emissions mitigation costs through their rates, similarly to how
they seek to recover other costs associated with constructing and
operating a project, such as the cost of other construction
mitigation requirements or the cost of fuel. Additionally, the
Commission's process for section 7 and section 4 rate cases is
designed to protect shippers from unjust or unreasonable rates and
will continue to do so with respect to the recovery of costs for
mitigation measures.'').
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29. Turning to the Commission's consideration of impacts on
landowners and surrounding communities, as the majority recognizes, the
Original Policy Statement's primary focus was on economic impacts
associated with a permanent right-of-way on a landowner's property.\86\
Going forward, the consideration ``of impacts to landowners will be
more expansive.'' \87\ The majority clarifies that the ``consideration
of impacts to communities surrounding a proposed project will include
an assessment of impacts to any environmental justice communities and
of necessary mitigation to avoid or lessen those impacts.'' \88\ And
``expectations'' are established ``for how pipeline applicants will
engage with landowners.'' \89\
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\86\ See Updated Policy Statement, 178 FERC ] 61,107 at P 78
(citing Original Policy Statement, 88 FERC ] 61,227 at 61,749 (``The
balancing of interests and benefits that will precede the
environmental analysis will largely focus on economic interests such
as the property rights of landowners.''))
\87\ Id.
\88\ Id. P 79.
\89\ Id. P 80.
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30. The majority also commits itself to ``robust early engagement
with all interested landowners, as well as continued evaluation of
input from such parties during the course of any given proceeding'' and
states that the Commission ``will, to the extent possible, assess a
wider range of landowner impacts.'' \90\ Further, the majority states
that it ``expect[s] pipeline applicants to take all appropriate steps
to minimize the future need to use eminent domain,'' including
``engage[ment] with the public and interested stakeholders during the
planning phase of projects to solicit input on route concerns and
incorporate reroutes, where practicable, to address landowner concerns,
as well as providing landowners with all necessary information.'' \91\
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\90\ Id. P 81.
\91\ Id. P 82.
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31. The majority states that it ``expect[s] pipelines to take
seriously their obligation to attempt to negotiate easements
respectfully and in good faith with impacted landowners'' and indicates
that ``[t]he Commission will look unfavorably on applicants that do not
work proactively with landowners to address concerns.'' \92\ Does this
mean that the majority plans to weigh, in its balancing of interests,
allegations concerning whether the applicant has engaged in good faith
negotiation of easements and collaboration with landowners to address
concerns? It appears so. The Commission later states that ``[i]n
assessing potential impacts to landowners, the Commission will consider
the steps a pipeline applicant has already taken to acquire lands
through respectful and good faith negotiation, as well as the
applicant's plans to minimize the use of eminent domain upon receiving
a certificate.'' \93\
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\92\ Id.
\93\ Id. P 85.
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32. It is worth reminding my colleagues that on the very same
meeting that this order is issued, the Commission also issues an order
\94\ that reaffirms a decision to deny landowners' request for the
Commission to interpret the scope of NGA section 7(h) because, in my
colleagues' view, NGA section 7(h) is ``a provision that gives courts a
particular implementing role'' and therefore ``is better resolved by
the courts than the Commission.'' \95\ And yet here, the Commission
contemplates considering in its balancing whether applicants have
engaged in good faith negotiations for easements pursuant to NGA
section 7(h).
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\94\ See Spire STL Pipeline LLC, 178 FERC ] 61,109 at P 10
(2022) (citation omitted).
\95\ Spire STL Pipeline LLC, 177 FERC ] 61,147, at P 70 (2021)
(citation omitted); see id. (Danly, Comm'r, concurring in part and
dissenting in part) (disagreeing with the Commission's decision to
not interpret NGA section 7(h) in the first instance and to leave
the interpretation to the courts).
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33. Finally, the Commission discusses how it will consider impacts
to environmental justice communities. In explaining its objectives, the
majority states that ``[t]he consideration of cumulative impacts is
particularly important when it comes to conducting an environmental
justice analysis.'' \96\ In support, the Commission has the following
footnote:
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\96\ Updated Policy Statement, 178 FERC ] 61,107 P 90 (relying
on a repealed definition for ``cumulative impacts,'' formerly 40 CFR
1508.7 (1978), in the Council on Environmental Quality's (CEQ)
regulations) (citations omitted).
`` `Cumulative impact' is the impact on the environment which
results from the incremental impact of the action when added to
other past, present, and reasonably foreseeable future actions
regardless of what agency (Federal or non-Federal) or person
undertakes such other actions. Cumulative impacts can result from
individually minor but collectively significant actions taking place
over a period of time.'' 40 CFR 1508.7 (1978).\97\
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\97\ Id. P 90 n.213.
34. There is no problem with announcing the paradigm by which a
particular type of analysis will be conducted, but this looks very much
as though my colleagues have decided that they can disregard currently-
effective regulations and adopt their own definition of the ``effects''
that should be considered in the Commission's
[[Page 11569]]
analysis.\98\ The current NEPA regulations repealed the definition of
``Cumulative impact'' previously contained in 40 CFR 1508.7.\99\ The
Commission, in attempting to go farther than the CEQ's regulations,
reasons that ``[t]o adequately capture the effects of cumulative
impacts, it is essential that the Commission consider those pre-
existing conditions and how the adverse impacts of a proposed project
may interact with and potentially exacerbate them.'' \100\
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\98\ Cf. Updated Policy Statement, 178 FERC ] 61,107 at P 74
n.189 (``Recognizing that CEQ is in the process of revising its NEPA
regulations, the Commission will consider the comments in this
docket regarding NEPA in our future review of our regulations,
procedures, and practices for implementing NEPA.)
\99\ See 40 CFR 1508.1(g)(3) (``An agency's analysis of effects
shall be consistent with this paragraph (g). Cumulative impact,
defined in 40 CFR [Sec. ] 1508.7 (1978), is repealed.'').
\100\ Updated Policy Statement, 178 FERC ] 61,107 at P 90.
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35. I disagree with the Commission's decision to disregard CEQ's
regulations.\101\ The Commission, in its own regulations, states that
it ``will comply with the regulations of the [CEQ] except where those
regulations are inconsistent with the statutory requirements of the
Commission.'' \102\ Regardless of the latitude the majority thinks we
may enjoy when conducting our analyses, it is a matter of black letter
law that we are constrained by our regulations which adopt CEQ's
regulations; we are also unable to conjure rubrics out of thin air
without explanation.
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\101\ See 40 CFR 1508.1(g) (defining ``effects or impacts'').
\102\ 18 CFR 380.1.
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III. The Commission's Approach of ``Expecting'' Self-Imposed Mitigation
Appears Calculated To Circumvent Statutory Limits on the Commission's
Authority
36. In the Updated Policy Statement, as well as in the Interim GHG
Policy Statement, the Commission has asserted a dramatic expansion of
its conditioning authority. As explained above, the Commission likely
does not have the statutory authority to enter this new territory. It
is not surprising, therefore, to see a consistent theme in the Updated
Policy Statement that the Commission has expectations of
applicants.\103\ The Commission expects more of applicants going
forward. Should those expectations not be met to the Commission's
satisfaction, the Commission suggests that it will weigh that against
finding that the project is required by the public convenience and
necessity.\104\
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\103\ See Updated Policy Statement, 178 FERC ] 61,107 at P 53
(stating that ``the Commission's expectations and requirements for
how applicants should demonstrate project need have evolved over
time'').
\104\ See, e.g., id. P 74 (``Should we deem an applicant's
proposed mitigation of impacts inadequate to enable us to reach a
public interest determination, we may condition the certificate to
require additional mitigation. We may also deny an application based
on any of the types of adverse impacts described herein, including
environmental impacts, if the adverse impacts as a whole outweigh
the benefits of the project and cannot be mitigated or
minimized.''); id. P 82 (``[W]e expect pipelines to take seriously
their obligation to attempt to negotiate easements respectfully and
in good faith with impacted landowners. The Commission will look
unfavorably on applicants that do not work proactively with
landowners to address concerns.'').
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37. Instead of saying that it is imposing or requiring the legally
dubious conditions itself, the Commission is expecting the natural gas
companies to play a game of ``sentence first--verdict afterwards,''
\105\ where the applicants choose their own sentence--their proposed
mitigation measures--in an effort to guess at the Commission's
expectations. Only then will the Commission rule on whether the project
is required by the public convenience and necessity and reveal whether
the proposed mitigation is sufficient.
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\105\ Lewis Carroll, Alice's Adventures in Wonderland and
Through the Looking-Glass 107 (Hugh Haughton ed., Penguin Classics
1998).
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38. It works in the Commission's favor for applicants to impose
their own mitigation measures. If the applicant proposes the mitigation
instead of having it imposed by the Commission, it is less likely that
a court would deem such condition unreasonable or beyond the
Commission's authority should it come to be challenged at all.\106\ How
can a condition be unreasonable or beyond the Commission's jurisdiction
if it is imposed at the suggestion of the applicant--the party who
needs to satisfy such conditions?
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\106\ See 15 U.S.C. 717f(e) (``The Commission shall have the
power to attach to the issuance of the certificate and to the
exercise of the rights granted thereunder such reasonable terms and
conditions as the public convenience and necessity may require.'')
(emphasis added).
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IV. It Is Unclear Whether the Updated Policy Statement Is Actually
Binding and Whether the Commission Should Have Proceeded Through
Rulemaking
39. Whether the Commission can impose mitigation as contemplated
here, or whether the Commission lacks authority to do so with its
conditioning authority will ultimately be addressed by the courts. I
recognize the Commission's assertion that the Updated Policy Statement
is not binding.\107\ I question whether that is actually the case.\108\
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\107\ Updated Policy Statement, 178 FERC ] 61,107 at P 3
(stating that the Updated Policy Statement does not establish
binding rules, but rather it is intended to explain how the
Commission will consider NGA section 7 certificate applications).
\108\ See Interstate Nat. Gas Ass'n of Am. v. FERC, 285 F.3d 18,
59 (D.C. Cir. 2002) (``The distinction between substantive rule and
policy statement is said to turn largely on whether the agency
position is one of `present binding effect,' i.e., whether it
`constrains the agency's discretion.' '') (citations omitted); Brown
Express, Inc. v. United States, 607 F.2d 695, 701 (5th Cir. 1979)
(``An announcement stating a change in the method by which an agency
will grant substantive rights is not a `general statement of
policy.' '').
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40. Given the non-binding designation, there may indeed be well-
founded concerns by parties seeking to challenge the Updated Policy
Statement.\109\ But as explained above, the Commission has established
its expectations regarding what information it wants included in
certificate applications and plans to apply the Updated Policy
Statement to both currently-pending \110\ and future applications for a
certificate of public convenience and necessity. For parties hesitant
to challenge a ``non-binding'' policy statement, I submit that a court
may perhaps be receptive to arguments of aggrievement based on the
interests of shippers who will now likely have to renegotiate their
agreements for proposed projects with currently-pending certificate
applications.
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\109\ See Panhandle E. Pipe Line Co. v. FERC, 198 F.3d 266, 270
(D.C. Cir. 1999) (denying the petition for review because ``[t]he
challenged opinions [were] non-binding policy statements'' and
therefore, the court found that the party petitioning for review was
``not aggrieved and has not suffered an injury-in-fact.'').
\110\ See Updated Policy Statement, 178 FERC ] 61,107 at P 100
(``[T]he Commission will apply the Updated Policy Statement to any
currently pending applications for new certificates. Applicants will
be given the opportunity to supplement the record and explain how
their proposals are consistent with this Updated Pol
[…truncated; see source link]Indexed from Federal Register on March 1, 2022.
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