Two members of the Federal Energy Regulatory Commission today warned that a recent federal appeals court ruling involving the Interior Department’s Bureau of Land Management has important implications for FERC’s handling of environmental impacts of greenhouse gas emissions in natural gas pipeline and liquefied natural gas export cases.
Citing a front page article in this morning’s Washington Post, Commissioner Cheryl LaFleur noted that U.S. District Court Judge for the D.C. Circuit, Rudolph Contreras, put a halt to BLM’s oil and gas leasing of federal lands in Wyoming because of inadequate consideration of the impacts of greenhouse gases. The judge said BLM failed to meet the standards of the National Environmental Policy Act and remanded the leasing program back to Interior. Contreras said BLM “did not sufficiently consider climate change” in its leasing program.
LaFleur, who has long been pushing FERC to upgrade its greenhouse gas environmental evaluations in pipeline and LNG cases, said, “BLM failed to take a hard look at the cumulative impact” of the leasing program. The judge remanded it. “We should get ahead of these issues proactively rather than waiting for the courts to tell us what to do.”
Holding up a copy of the Post, Commissioner Richard Glick said that FERC is “creating a lot of litigation risk by putting our head in the sand on the impacts of our actions on climate change.” Glick and LaFleur are FERC’s two Democratic commissioners, and have been raising the issue of including rigorous evaluation of greenhouse gas emissions in pipeline and LNG cases, although they do not vote in unison on what is usually a non-partisan commission.
LaFleur is leaving FERC in June after nearly 10 years. During her tenure, she has served twice as acting chairman and once as chairman. Glick’s term at FERC began in November 2017.
In today meeting, LaFleur was the sole dissenter in an order that removes mitigation conditions FERC imposed when it approved the merger of Louisville Gas and Electric and Kentucky Utilities in 1996 and its withdrawal from the Midcontinent Independent System Operator in 2006. The mitigation was aimed at preventing horizontal market power that could be used against municipal utilities and Tennessee Valley Authority distribution cooperatives.
“On this record, “ LaFleur said, “I am not persuaded that removing this mitigation is consistent with the public interest and, at a minimum, I believe the commission should engage in further record development before making that determination” to remove the mitigation measures. She said she would have preferred to set the matter for a hearing.
Commissioners Glick and Bernard McNamee, and chairman Neil Chatterjee voted to approve the order.
The commission this morning unanimously agreed to examine its policies on calculating returns on equity (ROE) used to set rates for utilities under its jurisdiction, and on “possible improvements to its electric transmission incentive policy.” The commission approved two notices of inquiry. The ROE notice follows a 2017 ruling by the U.S. Court of Appeals for the D.C. Circuit in a rate case in Maine. A FERC press release says, “Although the court did not expressly question the commission’s specific finding,” it did raise questions about the validity of where the commission set the ROE.
The second notice of inquiry, on transmission rate incentives, calls for a look at what has occurred with transmission planning following FERC’s order No. 679 13 years ago that provided for ROE adders to compensate for risks to new transmission projects.
— Kennedy Maize