“The ink has gone dry on FERC’s rubber stamp for gas projects,” commented Moneen Nasmith, Earthjustice senior attorney.
The greenhouse gas impacts of FRC’s decisions granting authority for new natural gas pipelines has again come into public view. Yesterday (July 30) the D.C. Circuit Court of Appeals bluntly rejected a January 2023 FERC order approving Transco’s Regional Energy Access Expansion (REAE) project – some 36 miles of new pipe in Pennsylvania and a New Jersey compressor station to bring more Marcellus gas to the Garden State.
The 2023 FERC order reflected an internal agency compromise designed to finesse a raging dispute about how the agency should factor methane emissions from new gas pipelines into its decisions. Commission Democrats had long been pushing the agency to end its historic reticence to take on greenhouse gas issues in the face of prior D.C. Circuit orders that it do so. Republican commissioners pushed back. Tempers flared.
Former FERC Chairman Richard Glick had been directing the agency to address greenhouse gas issues, while Republicans dug their heels in and called on outside political muscle. In February 2022 under Glick’s direction, FERC issued an “Interim Greenhouse Gas (GHG) Emissions Policy Statement (PL21-3-000),” which essentially brought the commission into line with the National Environmental Policy Act.
Less than a month later, facing backlash in Congress, FERC abandoned its new policy. E&E News reported, “In a decision issued unanimously at the commission’s monthly meeting yesterday, FERC will revert back to its long-standing method for reviewing natural gas pipeline applications — while opening changes announced in February to feedback rather than applying them immediately.”
The dispute eventually cost Democrat Click his job, Sen. Joe Manchin, a coal and gas state solon and then the Democratic chairman of the Senate Energy Committee, which approves FERC nominations, refused to support Glick for another term.
When Democrat Willie Phillips replaced Glick as FERC chairman, he and the Republican commissioners at the time agreed to a greenhouse gas waffle: the commission would acknowledge that greenhouse gas issues were important but assert that they couldn’t figure out what to do about it.
That prompted former Commissioner Allison Clements to issue repeated dissents to FERC orders approving new pipelines over the remaining years of her term. An April dissent in a Transco case is typical of her reasoning: “I dissent from the discussion…contending the Commission is unable to assess the significance of the impacts of greenhouse gas (GHG) emissions.” She added that the Administrative Procedures Act “requires the Commission to provide a reasoned explanation of how it factored the GHG impacts into its” decisions.
The FERC REAE order drew immediate fire from local and national environmental groups, arguing that FERC failed to consider the findings of its own Environmental Impact Statement in the order. New Jersey also objected, arguing that the state’s own analysis said it did not need or want additional natural gas supply capacity.
In a unanimous three-judge order, the court agreed with the environmental challenge and the New Jersey’s objections. Writing for the court, Judge J. Michelle Childs said, “We hold that the Commission failed to adequately explain its decision to not make a significance determination regarding greenhouse gas (‘GHG’) emissions and failed to discuss possible mitigation measures.”
Childs added, “The Commission’s decision not to make a case-specific determination about the significance of the Project’s anticipated GHG emissions, in light of its own stated precedent that it can do so, nor to explain why it believed it could not do so, was arbitrary and capricious,” a direct reference to the Administrative Procedures Act.
She noted that FERC in the Northern Natural Gas Co. case earlier said its prior position that it was “unable to assess the significance of a project’s GHG emissions or those emissions’ contribution to climate change” was no longer the case. Childs chided FERC: “On the heels of Northern Natural, the Commission here reverts without acknowledgement or explanation to its prior stance that it cannot assess the significance of the Project’s expected GHG emissions.”
Childs then took on the issue of the need for the project, as asserted by Transco and disputed by New Jersey. To grant a certificate to go ahead with the project, she noted, “FERC must first ‘ensure that a project will not be subsidized by existing customers’ by finding a ‘market need for the project.’ If FERC finds a market need, it must then balance any potential adverse impacts of the project against its purported public benefits.”
Again, FERC failed: “We hold that FERC acted arbitrarily in granting the Certificate Order because it did not respond to some of the 21 material challenges to its finding of market need for the Project.” The commission didn’t explain why it rejected New Jersey’s two market studies showing current capacity to meet the New Jersey ratepayers’ natural gas demands beyond 2030. It didn’t examine how local gas distribution companies “can pass on fixed pipeline construction costs to existing captive ratepayers while profitably selling any excess capacity to others, perhaps even at below-market prices.” It dismissed New Jersey law mandating “sizeable and continuous reductions to natural gas usage by public utilities, and instead described those requirements as unenforceable.”
The court vacated the order in its entirely and tossed it back to FERC to try again. Pending appeals or rehearing requests, the commission will have to start with a blank slate.
In an interview, Nasmith told The Quad Report, “The court said FERC hasn’t provided enough of an explanation about why they can’t do something” about greenhouse gas emissions. “They were putting their finger on why it matters that FERC keeps punting on this. FERC essentially takes climate out of the balancing test of whether or not the project is required.” She added that in considering New Jersey’s objection to the project, the court rejected FERC’s long-time practice of treating precedent agreements as trumping any other objections to a pipeline project. “This is a big change to how FERC has to d0 business. The opinion is really clear that FERC has to evenly weigh the evidence and provide cogent explanations” for their decisions.
Joining Childs in the order were Judges Nina Pillard and Bradley N. Garcia. Childs and Garcia are Biden appointees and Pillard is an Obama appointee.
–Kennedy Maize