Commissioner Bernard L. McNamee Statement
March 25, 2020

Docket No. CP16-357-001 PDF

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Concurrence Regarding Columbia Gas Transmission, LLC, and Columbia Gulf Transmission, LLC

Today’s order denies Allegheny Defense Project, Ohio Valley Environmental Coalition, and Sierra Club’s (collectively, Allegheny) joint request for rehearing of the Commission’s certificate order authorizing the construction and operation of Columbia Gas Transmission, LLC’s (Columbia Gas) Mountaineer XPress Project and Columbia Gulf Transmission, LLC’s (Columbia Gulf) Gulf XPress Project (collectively, Projects). 1

I agree with today’s order that, contrary to Allegheny’s contentions, the Commission’s certificate order complies with both the Natural Gas Act (NGA) and the National Environmental Policy Act (NEPA). Among other findings, today’s order concludes that the Commission was not required to consider environmental effects related to upstream gas production because those effects are not reasonably foreseeable effects caused by the construction of the Mountaineer XPress Project.2 Today’s order also notes that the certificate order quantifies an upper-bound estimate of GHG emissions that could be combusted by unknown end users purchasing from the market gas transported using the Projects’ firm transportation capacity.3 However, the order explains that the downstream GHG estimate “went beyond what is required to comply with NEPA” as downstream use of natural gas “is attenuated and not reasonably foreseeable.”4 Further, today’s order explains that the Social Cost of Carbon is not a suitable methodology to determine whether project-related GHG emissions are significant. 5

Although I fully support today’s order, I write separately to further address arguments that the Commission can deny a certificate application based on environmental effects related to the upstream production or downstream use of natural gas, or that the Commission can mitigate such effects. As in this case, there have been contentions in certificate proceedings that the NGA authorizes the Commission to deny a certificate application based on the environmental effects that result from the upstream production and downstream use of natural gas.6 There have also been contentions that the NGA authorizes the Commission to establish measures to mitigate GHG emissions, and that the Commission violates the NGA and NEPA by not determining whether GHG emissions significantly affect the environment. I disagree.

A close examination of the statutory text and foundation of the NGA demonstrates that the Commission does not have the authority under the NGA or NEPA to deny a pipeline certificate application based on the environmental effects of the upstream production or downstream use of natural gas, nor does the Commission have the authority to unilaterally establish measures to mitigate GHG emissions. Further, the Commission has no objective basis to determine whether GHG emissions will have a significant effect on climate change nor the authority to establish its own basis for making such a determination.

It is my intention that my discussion of the statutory text and foundation will assist the Commission, the courts, and other parties in their arguments regarding the meaning of the “public convenience and necessity” and the Commission’s consideration of a project’s effect on climate change. Further, my review of appellate briefs filed with the court and the Commission’s orders suggests that the court may not have been presented with the arguments I make here. Before I offer my arguments, it is important that I further expound on the current debate.

I.Current debate

When acting on a certificate application, the Commission has two primary statutory obligations: (1) to determine whether the project is required by the “public convenience and necessity” as required by the NGA;7 and (2) to take a “hard look” at the direct,8 indirect,9 and cumulative effects10 of the proposed action as required by NEPA and the Council on Environmental Quality’s (CEQ) implementing regulations. Recently, there has been much debate concerning what factors the Commission can consider in determining whether a proposed project is in the “public convenience and necessity,” and whether the effects of upstream production and downstream use of natural gas are indirect effects of a certificate application as defined by NEPA.

Equating NGA section 7’s “public convenience and necessity” standard with a “public interest” standard, my colleague has argued that NGA section 7 requires the Commission to weigh GHGs emitted from the project facilities and related to the upstream production or downstream use of natural gas.11 In support of his contention, my colleague has cited the holding in Sabal Trail and dicta in Atlantic Refining Co. v. Public Service Commission of State of New York (CATCO).12 My colleague has argued that the NGA requires the Commission to determine whether GHG emissions have a significant impact on climate change in order for climate change to “play a meaningful role in the Commission’s public interest determination.”13 And he argues that by not determining the significance of those emissions, the “public interest determination [] systematically excludes the most important environmental consideration of our time” and “is contrary to law, arbitrary and capricious” and is not “the product of reasoned decisionmaking.”14

My colleague has also argued that the emissions from all downstream use of natural gas are indirect effects of a project and must be considered in the Commission’s NEPA environmental documents.15 In other proceedings, he has argued that the Commission must also consider as indirect effects GHG emissions from upstream natural gas production.16 He has asserted that NEPA requires the Commission to determine whether GHG emissions will have a significant effect on climate change and that the Commission could make that determination using the Social Cost of Carbon or its own expertise.17 Further, he has contended that the Commission could mitigate any GHG emissions in the event that it made a finding that the GHG emissions had a significant impact on climate change. 18

Several recent cases before the United States Court of Appeals for the D.C. Circuit have also considered the Commission’s obligations under NGA section 7 and NEPA as they apply to what environmental effects the Commission is required to consider under NEPA.19 In Sabal Trail, the D.C. Circuit vacated and remanded the Commission’s order issuing a certificate for the Southeast Market Pipelines Project, finding that the Commission inadequately assessed GHGs emitted from downstream power plants in its Environmental Impact Statement (EIS) for the project.20 The court held that the downstream GHG emissions resulting from burning the natural gas at the power plants were a reasonably foreseeable indirect effect of authorizing the project and, at a minimum, the Commission should have estimated those emissions.

Further, the Sabal Trail court found the Commission’s authorization of the project was the legally relevant cause of the GHGs emitted from the downstream power plants “because FERC could deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment.”21 The court stated the Commission could do so because, when considering whether pipeline applications are in the public convenience and necessity, “FERC will balance ‘the public benefits against the adverse effects of the project,’ see Minisink Residents for Envtl. Pres. & Safety v. FERC, 762 F.3d 97, 101-02 (D.C. Cir. 2014) (internal quotation marks omitted), including adverse environmental effects, see Myersville Citizens for a Rural Cmty. v. FERC, 783 F.3d 1301, 1309 (D.C. Cir. 2015).”22 Relying on its finding that the Commission could deny a pipeline on environmental grounds, the court distinguished Sabal Trail from the Supreme Court’s holding in Public Citizen, where the Court held “when the agency has no legal power to prevent a certain environmental effect, there is no decision to inform, and the agency need not analyze the effect in its NEPA review”23 and the D.C. Circuit’s decision in Sierra Club v. FERC (Freeport), where it held “that FERC had no legal authority to prevent the adverse environmental effects of natural gas exports.”24

Based on these findings, the court concluded that “greenhouse-gas emissions are an indirect effect of authorizing this project, which FERC could reasonably foresee, and which the agency has legal authority to mitigate.”25 The court also held “the EIS for the Southeast Market Pipelines Project should have either given a quantitative estimate of the downstream greenhouse emissions . . . or explained more specifically why it could not have done so.”26 The court impressed that “[it did] not hold that quantification of greenhouse-gas emissions is required every time those emissions are an indirect effect of an agency action” and recognized that “in some cases quantification may not be feasible.”27

More recently, in Birckhead v. FERC,28 the D.C. Circuit commented in dicta on the Commission’s authority to consider downstream emissions. The court stated that because the Commission could “‘deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment, the agency is the legally relevant cause of the direct and indirect environmental effects of pipelines it approves’—even where it lacks jurisdiction over the producer or distributor of the gas transported by the pipeline.”29 The court also examined whether the Commission was required to consider environmental effects related to upstream gas production, stating it was “left with no basis for concluding that the Commission acted arbitrarily or capriciously or otherwise violated NEPA in declining to consider the environmental impacts of upstream gas production.”30

I respect the holding of the court in Sabal Trail and the discussion in Birckhead, and I recognize that the Sabal Trail holding is binding on the Commission. However, I respectfully disagree with the court’s finding that the Commission can, pursuant to the NGA, deny a pipeline based on environmental effects stemming from the upstream production or downstream use of natural gas, and that the Commission is therefore required to consider such environmental effects under the NGA and NEPA.31

The U.S. Supreme Court has observed that NEPA requires an indirect effect to have “a reasonably close causal relationship” with the alleged cause.32 Whether there is a reasonably close causal relationship depends on “the underlying policies or legislative intent” of the agency’s organic statute “to draw a manageable line between those causal changes that may make an actor responsible for an effect and those that do not.”33 Below, I review the text of the NGA and subsequent acts by Congress to demonstrate that the “public convenience and necessity” standard in the NGA is not so broad as to include environmental effects of the upstream production or downstream use of natural gas, and that the Commission cannot be responsible for those effects.

As for GHGs emitted from pipeline facilities themselves, I believe that the Commission can consider such emissions in its public convenience and necessity determination and is required to consider them in its NEPA analysis. As I set forth below, however, the Commission cannot unilaterally establish measures to mitigate GHG emissions, and there currently is no suitable method for the Commission to determine whether GHG emissions are significant.

II.The NGA does not permit the Commission to deny a certificate application based on environmental effects related to the upstream production or downstream use of natural gas

To interpret the meaning of “public convenience and necessity,” we must begin with the text of the NGA.34 I recognize that the Commission35 and the courts have equated the “public convenience and necessity” standard with “all factors bearing on the public interest.”36 However, the phrase “all factors bearing on the public interest” does not mean that the Commission has “broad license to promote the general public welfare”37 or address greater societal concerns. Rather, the courts have stated that the words must “take meaning from the purposes of regulatory legislation.”38 The Court has made clear that statutory language “cannot be construed in a vacuum. It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.”39 The Court has further instructed that one must “construe statutes, not isolated provisions.” 40

Indeed, that is how the Court in CATCO – the first U.S. Supreme Court case including the “all factors bearing on the public interest” language – interpreted the phrase “public convenience and necessity.” In that case, the Court held that the public convenience and necessity requires the Commission to closely scrutinize initial rates based on the framework and text of the NGA.41

Following this precedent, the phrase “public convenience and necessity” must therefore be read within the overall statutory scheme of the NGA. As set forth below, construing the NGA as a statute demonstrates that Congress determined the public interest required (i) the public to have access to natural gas and (ii) economic regulation of the transportation and sale of natural gas to protect such public access.

A.The text of the NGA does not support denying a certificate application based on the environmental effects of the upstream production or downstream use of natural gas

1.NGA section 1(a)—limited meaning of “public interest”


Section 1 of the NGA sets out the reason for its enactment. NGA section 1(a) states, “[a]s disclosed in reports of the Federal Trade Commission [(FTC)] made pursuant to S. Res. 83 (Seventieth Congress, first session) and other reports made pursuant to the authority of Congress, it is declared that the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest, and that Federal regulation in matters relating to the transportation of natural gas and the sale thereof in interstate and foreign commerce is necessary in the public interest.”42

A review of the FTC Report referred to in NGA section 1 demonstrates that the NGA was enacted to counter activities that would limit the public’s access to natural gas and subject the public to abusive pricing. Specifically, the FTC Report states “[a]ll communities and industries within the capacity and reasonable distance of existing or future transmission facilities should be assured a natural-gas supply and receive it at fair, nondiscriminatory prices.”43

The FTC Report further states “[a]ny proposed Federal legislation should be premised, in part at least, on the fact that natural gas is a valuable, but limited, natural resource in Nation-wide demand, which is produced only in certain States and limited areas, and the conservation, production, transportation, and distribution of which, therefore, under proper control and regulation, are matters charged with high national public interest.”44

The text of NGA section 1(a) and its reference to the FTC Report make clear that “public interest” is directly linked to ensuring the public’s access to natural gas through regulating its transport and sale. Moreover, the NGA is designed to promote the “public interest” primarily through economic regulation. This is apparent in the text of the NGA and by its reference to the FTC Report that identifies the concern with monopolistic activity that would limit access to natural gas.45

Therefore, there is no textual support in NGA section 1 for the claim that the Commission may deny a pipeline application due to potential upstream and downstream effects of GHG emissions on climate change. But, this is not the end of the analysis. We must also examine the Commission’s specific authority under NGA section 7.

2.NGA section 7—Congress grants the Commission and pipelines authority to ensure the public’s access to natural gas

Like NGA section 1, the text of NGA section 7 makes clear that its purpose is to ensure that the public has access to natural gas. A review of the various provisions of NGA section 7 make this point evident:

Each of these textual provisions illuminate the ultimate purpose of the NGA: to ensure that the public has access to natural gas because Congress considered such access to be in the public interest.53 To now interpret “public convenience and necessity” to mean that the Commission has the authority to deny a certificate for a pipeline due to upstream or downstream emissions because the pipeline may result in access to, and the use of, natural gas would radically rewrite the NGA and undermine its stated purpose.

3.NGA section 1(b) and section 201 of the Federal Power Act (FPA)—authority over environmental effects related to the upstream production and downstream use of transported natural gas reserved to States

Statutory text also confirms that control over the physical environmental effects related to the upstream production and downstream use of natural gas are squarely reserved for the States. NGA section 1(b) provides that “[t]he provisions of this chapter . . . shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities for such distribution or to the production or gathering of natural gas.”54 The Ninth Circuit and the D.C. Circuit have interpreted the reference to distribution as meaning that States have exclusive authority over the gas once the gas moves beyond high-pressure mainlines.55 Likewise, FPA section 201 specifically reserves the authority to make generation decisions to the States.56

U.S. Supreme Court precedent and legislative history confirm that the regulation of the physical upstream production and downstream use of gas is reserved for the States.57 The Court has observed that Congress enacted the NGA to address “specific evils” related to non-transparent rates for the interstate transportation and sale of natural gas and the monopoly power of holding companies that owned natural gas pipeline company stock.58 The Court has also found that Congress enacted the NGA to

In Transco,60 the Court also recognized that “Congress did not desire that an important aspect of this field be left unregulated.”61 Thus, the Court held that where congressional authority is not explicit and States cannot practicably regulate a given area, the Commission can consider the issue in its public convenience and necessity determination.62

Based on this rule, and legislative history,63 the Transco Court found that in its public convenience and necessity determination, the Commission appropriately considered whether the end-use of the gas in a non-producing state was economically wasteful as there was a regulatory gap and no State could be expected to control how gas is used in another State.64 The Court also impressed that

In contrast, there is no legislative history to support the Commission considering environmental effects related to the upstream production or downstream use of gas. Furthermore, the field of environmental regulation of such activities is not one that has been left unregulated.66 Unlike in Transco, States can reasonably be expected to regulate air emissions from the upstream production or downstream use of natural gas: “air pollution control at its source is the primary responsibility of States and local governments.”67 The Clean Air Act vests States with authority to issue permits to regulate stationary sources related to upstream and downstream activities.68 In addition, pursuant to their police powers, States have the ability to regulate environmental effects related to the upstream production and downstream use of natural gas within their jurisdictions.69 The FTC Report referenced in NGA section 1(a) recognizes States’ ability to regulate the use of natural gas.70 And, various States have exercised this ability. For example, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont participate in the Regional Greenhouse Gas Initiative (RGGI), which requires power plants with a capacity over 25 megawatts to hold allowances equal to their CO2 emissions over a three-year control period.71

Some may make the argument that “considering” the environmental effects related to upstream production and downstream use is hardly “regulating” such activities. I disagree. For the Commission to consider such effects would be an attempt to exert influence over States’ regulation of physical upstream production or downstream use of natural gas, which the Court in Transco suggested would be encroaching upon forbidden ground. If, for example, the Commission considered and denied a certificate based on the GHG emissions released from production activities, the Commission would be making a judgment that such production is too harmful for the environment and preempting a State’s authority to decide whether and how to regulate upstream production of natural gas. Furthermore, for the Commission to consider and deny a project based on emissions from end users, the Commission would be making a judgment that natural gas should not be used for certain activities.72 Such exertion of influence is impermissible: “when the Congress explicitly reserves jurisdiction over a matter to the states, as here, the Commission has no business considering how to ‘induc[e] a change [of state] policy’ with respect to that matter.” 73

Hence, there is no jurisdictional gap in regulating GHG emissions for the Commission to fill. The NGA reserves authority over the upstream production and downstream use of natural gas to the States, and States can practicably regulate GHGs emitted by those activities. And, even if there were a gap that federal regulation could fill, as discussed below, it is nonsensical for the Commission to attempt to fill a gap that Congress has clearly meant for the EPA to occupy.74 Therefore, because GHG emissions from the upstream production and downstream use of natural gas are not properly of concern to the Commission, the Commission cannot deny a certificate application based on such effects.

B.Denying a pipeline based on upstream or downstream environmental effects would undermine other acts of Congress

Since enactment of the NGA and NEPA, Congress has enacted additional legislation promoting the production and use of natural gas and limiting the Commission’s authority over the natural gas commodity. Each of these legislation enactments indicates that the Commission’s authority over upstream production and downstream use of natural gas has been further limited by Congress. Arguments that the Commission can rely on the NGA’s public convenience and necessity standard and NEPA to deny a pipeline application so as to prevent the upstream production or downstream use of natural gas would undermine these acts of Congress.

1.Natural Gas Policy Act of 1978

Determining that federal regulation of natural gas limited interstate access to the commodity, resulting in shortages and high prices, Congress passed the Natural Gas Policy Act of 1978 (NGPA). The NGPA significantly deregulated the natural gas industry.75 Importantly, NGPA section 601(c)(1) states, “[t]he Commission may not deny, or condition the grant of, any certificate under section 7 of the Natural Gas Act based upon the amount paid in any sale of natural gas, if such amount is deemed to be just and reasonable under subsection (b) of this section.”76

Besides using price deregulation to promote access to natural gas, Congress gave explicit powers to the President to ensure that natural gas reached consumers. NGPA section 302(c) explicitly provides, “[t]he President may, by order, require any pipeline to transport natural gas, and to construct and operate such facilities for the transportation of natural gas, as he determines necessary to carry out any contract authorized under subsection (a).77” Similarly, the NGPA gave authority to the Secretary of Energy to promote access to natural gas.78

There can be no doubt about the plain language of the NGPA: the Court observed that Congress passed the NGPA to “promote gas transportation by interstate and intrastate pipelines.”79 Furthermore, the NGPA was “intended to provide investors with adequate incentive to develop new sources of supply.”80

2.Powerplant and Industrial Fuel Use Act of 1978

With respect to natural gas as a fuel source for electric generation, in 1987 Congress repealed sections of the Powerplant and Industrial Fuel Use Act of 1978 (Fuel Use Act),81 which had restricted the use of natural gas in electric generation so as to conserve it for other uses. With 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.82

3.Natural Gas Wellhead Decontrol Act of 1989

If there were any remaining doubt that the Commission has no authority to consider the upstream production of natural gas and its environmental effects, such doubt was put to rest when Congress enacted the Wellhead Decontrol Act.83 In this legislation, Congress specifically removed the Commission’s authority over the upstream production of natural gas.84

But the Wellhead Decontrol Act was not merely about deregulating upstream natural gas production. Congress explained that the reason for deregulating natural gas at the wellhead was important to ensuring that end users had access to the commodity. The Senate Committee Report for the Wellhead Decontrol Act states “the purpose (of the legislation) is to promote competition for natural gas at the wellhead to ensure consumers an adequate and reliable supply of natural gas at the lowest reasonable price.”85 Similarly, the House Committee Report to the Wellhead Decontrol Act notes, “[a]ll 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 suppliers.”86 The House Committee Report also states the Commission’s “current competitive ‘open access’ pipeline system [should be] maintained.”87 With this statement, the House Committee Report references Order No. 436 in which the Commission stated that open access transportation “is designed to remove any unnecessary regulatory obstacles and to facilitate transportation of gas to any end user that requests transportation service.”88

4.Energy Policy Act of 1992

In the Energy Policy Act of 1992 (EPAct 1992), Congress also expressed a preference for providing the public access to natural gas. EPAct section 202 states, “[i]t is the sense of the Congress that natural gas consumers and producers, and the national economy, are best served by a competitive natural gas wellhead market.” 89

The NGA, NGPA, the repeal of the Fuel Use Act, the Wellhead Decontrol Act, and EPAct 1992 each reflect Congressional mandates to promote the production, transportation, and use of natural gas. None of these acts, and no other law, including NEPA, modifies the presumption in the NGA to facilitate access to natural gas. And, it is not for the Commission to substitute its judgment for that of Congress in determining energy policy.

C.“Public convenience and necessity” does not support consideration of environment effects related to upstream production or downstream use of natural gas

In addition to considering the text of the NGA as a whole and subsequent-related acts, we must interpret the phrase “public convenience and necessity” as used when enacted. As discussed below, “public convenience and necessity” has always been understood to mean “need” for the service. To the extent the environment is considered, such consideration is limited to the effects stemming from the construction and operation of the proposed facilities and is not as broad as some would believe.90

When Congress enacted the NGA, the phrase “public convenience and necessity” was a term of art used in state and federal public utility regulation.91 In 1939, one year after the NGA’s enactment, the Commission’s predecessor agency, the Federal Power Commission, defined public convenience and necessity as “a public need or benefit without which the public is inconvenienced to the extent of being handicapped in the pursuit of business or comfort or both, without which the public generally in the area involved is denied to its detriment that which is enjoyed by the public of other areas similarly situated.”92 To make such showing, the Commission required certificate applicants to demonstrate that the public needed its proposed project, the applicant could perform the proposed service, and the service would be provided at reasonable rates.93

To the extent that public convenience and necessity included factors other than need, they were limited and directly related to the proposed facilities, not upstream or downstream effects related to the natural gas commodity. Such considerations included the effects on pipeline competition, duplication of facilities, and social costs, such as misuse of eminent domain and environmental impacts resulting from the creation of the right-of-way or service.94 For example, the Commonwealth of Massachusetts considered environmental impacts resulting from the creation of the right-of-way and service in denying an application to build a railroad along a beach. The Commonwealth found that “the demand for train service was held to be outweighed by the fact the beach traversed ‘will cease to be attractive when it is defaced and made dangerous by a steam railroad.’” 95

The Commission’s current guidance for determining whether a proposed project is in the public convenience and necessity is consistent with the historic use of the term. As outlined in its 1999 Certificate Policy Statement, the Commission implements an economic balancing test that is focused on whether there is a need for the facilities and adverse economic effects stemming from the construction and operation of the proposed facilities themselves. The Commission designed its balancing test “to foster competitive markets, protect captive customers, and avoid unnecessary environmental and community impacts while serving increasing demands for natural gas.”96 The Commission also stated that its balancing test “provide[s] appropriate incentives for the optimal level of construction and efficient customer choices.”97 To accomplish these objectives, the Commission determines whether a project is in the public convenience and necessity by balancing the public benefits of the project against the adverse economic impacts on the applicant’s existing shippers, competitor pipelines and their captive customers, and landowners.98

Although the Certificate Policy Statement also recognizes the need to consider certain environmental issues related to a project, it makes clear that the environmental impacts to be considered are related to the construction and operation of the pipeline itself and the creation of the right-of-way.99 As noted above, it is the Commission’s objective to avoid unnecessary environmental impacts, meaning to route the pipeline to avoid environmental effects where possible and feasible, not to prevent or mitigate environmental effects from the upstream production or downstream use of natural gas. This is confirmed when one considers that, if the project had unnecessary adverse environmental effects, the Commission would require the applicant to reroute the pipeline: “If the environmental analysis following a preliminary determination indicates a preferred route other than the one proposed by the applicant, the earlier balancing of the public benefits of the project against its adverse effects would be reopened to take into account the adverse effects on landowners who would be affected by the changed route.” 100

Further, the Certificate Policy Statement provides, “[i]deally, an applicant will structure its proposed project to avoid adverse economic, competitive, environmental, or other effects on the relevant interests from the construction of the new project.” 101 And that is what occurred in this case. The EIS for the Projects states that Columbia Gas adopted all three route variations identified by Commission staff during pre-filing, and adopted and incorporated 20 additional route variations and 28 minor modifications into the proposed Mountaineer XPress pipeline route. In addition, the EIS stated that “[t]hese changes resulted from the identification of sensitive environmental resources during the 2016 environmental field surveys and were designed to address landowner concerns, avoid crossing certain parcels and landmarks, and minimize or avoid constructing in areas with constructability constraints.” 102 These examples are consistent with the NGA’s and Certificate Policy Statement’s focus on environmental impacts related to the construction and operation of the pipeline itself and the creation of the right-of-way.

In sum, the meaning of “public convenience and necessity” does not support weighing the public need for the project against effects related to the upstream production or downstream use of natural gas.

D.NEPA does not authorize the Commission to deny a certificate application based on emissions from the upstream production or downstream use of transported natural gas

The text of the NGA, and the related subsequent acts by Congress, cannot be revised by NEPA or CEQ regulations to authorize the Commission to deny a certificate application based on effects from the upstream production and downstream use of natural gas.

The courts have made clear that NEPA does not expand a federal agency’s substantive or jurisdictional powers.103 Nor does NEPA repeal by implication any other statute.104 Rather, NEPA is a merely procedural statute that requires federal agencies to take a “hard look” at the environmental effects of a proposed action before acting on it.105 NEPA also does not require a particular result. In fact, the Supreme Court has stated, even if a NEPA analysis identifies an environmental harm, the agency can still approve the project.106

Further, CEQ’s regulations on indirect effects cannot make the GHG emissions from upstream production or downstream use part of the Commission’s public convenience and necessity determination under the NGA. As stated above, an agency’s obligation under NEPA to consider indirect environmental effects is not limitless. Indirect effects must have “a reasonably close causal relationship” with the alleged cause, and that relationship is dependent on the “underlying policies or legislative intent.”107 NEPA requires such reasonably close causal relationship because “inherent in NEPA and its implementing regulations is a ‘rule of reason,’”108 which “recognizes that it is pointless to require agencies to consider information they have no power to act on, or effects they have no power to prevent.”109 Thus, “where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant ‘cause’ of the effect.”110

The Commission has no power to deny a certificate for effects related to the upstream production or downstream use of natural gas. As explained above, the Commission’s consideration of adverse environmental effects is limited to those effects stemming from the construction and operation of the pipeline facility and the related right-of-way. For the Commission to deny a pipeline based on GHGs emitted from the upstream production or downstream use of natural gas would be contrary to the text of the NGA and subsequent acts by Congress. The NGA reserves such considerations for the States, and the Commission must respect the jurisdictional boundaries set by Congress. Suggesting that the Commission can consider such effects not only risks duplicative regulation but in fact defies Congress.

III.The NGA does not contemplate the Commission establishing mitigation for GHG emissions from pipeline facilities

My colleague has also suggested that the Commission should require the mitigation of GHG emissions from the certificated pipeline facilities and the upstream production and downstream use of natural gas transported on those facilities. I understand his suggestions as proposing a carbon emissions fee, offsets or tax (similar to the Corps’ compensatory wetland mitigation program), technology requirements (such as scrubbers or electric-powered compressor units),111 or emission caps. Some argue that the Commission can require such mitigation under NGA section 7(e), which provides “[t]he Commission shall have the power to attach to the issuance of the certificate . . . such reasonable terms and conditions as the public convenience and necessity may require.”112

I disagree. The Commission cannot interpret NGA section 7(e) to allow the Commission to unilaterally establish measures to mitigate GHG emissions because Congress, through the Clean Air Act, assigned the EPA and the States exclusive authority to establish such measures. Congress designated the EPA as the expert agency “best suited to serve as primary regulator of greenhouse gas emissions,”113 not the Commission.

The Clean Air Act establishes an all-encompassing regulatory program, supervised by the EPA to deal comprehensively with interstate air pollution.114 Congress entrusted the Administrator of the EPA with significant discretion to determine appropriate emissions measures. Congress delegated the Administrator the authority to determine whether pipelines and other stationary sources endanger public health and welfare; section 111 of the Clean Air Act directs the Administrator of the EPA “to publish (and from time to time thereafter shall revise) a list of categories of stationary sources. He shall include a category of sources in such list if in his judgment it causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare”115 and to establish standards of performance for the identified stationary sources.116 The Clean Air Act requires the Administrator to conduct complex balancing when determining a standard of performance, taking into consideration what is technologically achievable and the cost to achieve that standard.117

In addition, the Clean Air Act allows the Administrator to “distinguish among classes, types, and sizes within categories of new sources for the purpose of establishing such standards.”118 The Act also permits the Administrator, with the consent of the Governor of the State in which the source is to be located, to waive its requirements “to encourage the use of an innovative technological system or systems of continuous emission reduction.” 119

Congress also intended that States would have a role in establishing measures to mitigate emissions from stationary sources. Section 111(f) notes that “[b]efore promulgating any regulations . . . or listing any category of major stationary sources . . . the Administrator shall consult with appropriate representatives of the Governors and of State air pollution control agencies.”120

Thus, the text of the Clean Air Act demonstrates it is improbable that NGA section 7(e) allows the Commission to establish GHG emission standards or mitigation measures out of whole cloth. To argue otherwise would defeat the significant discretion and complex balancing that the Clean Air Act entrusts in the EPA Administrator, and would eliminate the role of the States.

Furthermore, to argue that the Commission may use its NGA conditioning authority to establish GHG emission mitigation—a field in which the Commission has no expertise—and address climate change—an issue that has been subject to profound debate across our nation for decades—is an extraordinary leap. The Supreme Court’s “major rules” canon advises that agency rules on issues that have vast economic and political significance must be treated “with a measure of skepticism” and require Congress to provide clear authorization.121 The Court has articulated this canon because Congress does not “hide elephants in mouseholes”122 and “Congress is more likely to have focused upon, and answered, major questions, while leaving interstitial matters to answer themselves in the course of the statute’s daily administration.”123

Courts would undoubtedly treat with skepticism any attempt by the Commission to establish GHG emission mitigation measures. Congress has introduced climate change bills since at least 1977,124 over four decades ago. Over the last 15 years, Congress has introduced and failed to pass 70 legislative bills to reduce GHG emissions—29 of those were carbon emission fees or taxes.125 For the Commission to suddenly declare such climate mitigation power resides in the long-extant NGA and that Congress’s efforts were superfluous strains credibility. Establishing a carbon emissions fee or tax, or GHG mitigation out of whole cloth would be a major rule, and Congress has made no indication that the Commission has such authority.

Some may make the argument that the Commission can develop mitigation measures without establishing a standard. I disagree. Establishing mitigation measures requires determining how much mitigation is required – i.e., setting a limit, or establishing a standard, that quantifies the amount of GHG emissions that will adversely affect the human environment. Some may also argue that the Commission has unilaterally established mitigation in other contexts, including wetlands, soil conservation, and noise. These examples, however, are distinguishable. Congress did not exclusively assign the authority to establish avoidance or restoration measures for mitigating effects on wetlands or soil to a specific agency. The Corps and the EPA developed a wetlands mitigation bank program pursuant to section 404 of the Clean Water Act.126 Congress endorsed such mitigation.127 As for noise, the Clean Air Act assigns the EPA Administrator authority over determining the level of noise that amounts to a public nuisance and requires federal agencies to consult with the EPA when its actions exceed the public nuisance standard.128 The Commission complies with the Clean Air Act by requiring project noise levels in certain areas to not exceed 55 dBA Ldn, as required by EPA’s guidelines. 129

Accordingly, there is no support that the Commission can use its NGA section 7(e) authority to establish measures to mitigate GHG emissions from proposed pipeline facilities or from the upstream production or downstream use of natural gas.130

IV.The Commission has no reliable objective standard for determining whether GHG emissions significantly affect the environment

My colleague has argued that the Commission violates the NGA and NEPA by not determining the significance of GHG emissions that are effects of a project.131 He has challenged the Commission’s explanation that it cannot determine significance because there is no standard for determining the significance of GHG emissions.132 He has argued that the Commission can adopt the Social Cost of Carbon133 to determine whether GHG emissions are significant or rely on its own expertise as it does for other environmental resources, such as vegetation, wildlife, or open land.134 He has suggested that the Commission does not make a finding of significance in order to deceptively find that a project is in the public convenience and necessity.135

I disagree. The Social Cost of Carbon is not a suitable method for determining whether GHG emissions that are caused by a proposed project will have a significant effect on climate change, and the Commission has no authority or objective basis using its own expertise to make such determination.

A.Social Cost of Carbon is not a suitable method to determine significance

The Commission has found, and I agree, that the Social Cost of Carbon is not a suitable method for the Commission to determine significance of GHG emissions.136 Because the courts have repeatedly upheld the Commission’s reasoning,137 I will not restate the Commission’s reasoning here.

However, I will address the suggestion that the Social Cost of Carbon can translate a project’s impact on climate change into “concrete and comprehensible terms” that will help inform agency decision-makers and the public at large.138 The Social Cost of Carbon, described as an estimate of “the monetized damages associated with an incremental increase in carbon emissions in a given year,”139 may appear straightforward. On closer inspection, however, the Social Cost of Carbon and its calculated outputs are not so simple to interpret or evaluate.140 When the Social Cost of Carbon estimates that one metric ton of CO2 costs $12 (the 2020 cost using a discount rate of 5 percent),141 agency decision-makers and the public have no objective basis or benchmark to determine whether that cost is significant. Bare numbers standing alone simply cannot ascribe significance.

B.The Commission has no authority or objective basis to establish its own framework

Some argue that the lack of externally established targets does not relieve the Commission from establishing a framework or targets on its own. Some have suggested that the Commission can make up its own framework, citing the Commission’s framework for determining return on equity (ROE) as an example. However, they overlook the fact that Congress designated the EPA, not the Commission, with exclusive authority to determine the amount of emissions that are harmful to the environment. In addition, there are no available resources or agency expertise upon which the Commission could reasonably base a framework or target.

As I explain above, Congress enacted the Clean Air Act to establish an all-encompassing regulatory program, supervised by the EPA to deal comprehensively with interstate air pollution. Section 111 of the Clean Air Act directs the Administrator of the EPA to identify stationary sources that “in his judgment cause[], or contribute[] significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare”142 and to establish standards of performance for the identified stationary sources.143 Thus, the EPA has exclusive authority for determining whether emissions from pipeline facilities will have a significant effect on the environment.

Further, the Commission is not positioned to unilaterally establish a standard for determining whether GHG emissions will significantly affect the environment when there is neither federal guidance nor an accepted scientific consensus on these matters.144 This inability to find an acceptable methodology is not for a lack of trying. The Commission reviews the climate science, state and national targets, and climate models that could inform its decision-making.145

Moreover, assessing the significance of project effects on climate change is unlike the Commission’s determination of ROE. Establishing ROE has been one of the core functions of the Commission since its inception under the FPA as the Federal Power Commission.146 And, setting ROE has been an activity of state public utility commissions, even before the creation of the Federal Power Commission.147 The Commission’s methodology is also founded in established economic theory.148 In contrast, assessing the significance of GHG emissions is not one of the Commission’s core missions and there is no suitable methodology for making such determination.

It has been argued that the Commission can establish its own methodology for determining significance, pointing out that the Commission has determined the significance of effects on vegetation, wildlife, and open land using its own expertise and without generally accepted significance criteria or a standard methodology.

I disagree. As an initial matter, it is important to note that when the Commission states it has no suitable methodology for determining the significance of GHG emissions, the Commission means that it has no objective basis for making such finding. The Commission’s findings regarding significance for vegetation, wildlife, and open land have an objective basis. For example for vegetation, the Commission determined the existing vegetation in the project area by using information made available by entities including EPA, Natural Resource Analysis Center at West Virginia University, and the Nature Conservancy.149 The Commission determined the project’s effect on vegetation by considering the existing vegetation that would be affected (e.g., interior forest, agricultural lands, open land), by using the applicant’s materials to quantify the amount of acres that will be temporarily impacted by construction and permanently impacted by operation, and by considering the mitigation and restoration activities that Columbia Gas and Columbia Gulf committed to implement.150 Based on information demonstrating that the Mountaineer XPress Project would affect 3,389 acres of forested land and that forested lands would have long-term to permanent impacts, the Commission made a reasoned finding that the Mountaineer XPress Project’ impacts on vegetation will not be significant; whereas because Gulf XPress Project will predominantly affect agricultural land and open land, the Gulf XPress Project would not have a significant impact on open land.151 The Commission conducted a similar evaluation of wildlife and open land.

In contrast, the Commission has no reasoned basis to determine whether a project has a significant effect on climate change. To assess a project’s effect on climate change, the Commission can only quantify the amount of project emissions and compare that number to national emissions to calculate a percentage of national emissions. That calculated number cannot inform the Commission on climate change effects caused by the project, e.g., increase of sea level rise, effect on weather patterns, or effect on ocean acidification. Nor are there acceptable scientific models that the Commission may use to attribute every ton of GHG emissions to a physical climate change effect.

Without adequate support or a reasoned target, the Commission cannot ascribe significance to particular amounts of GHG emissions. To do so would not only exceed our agency’s authority, but would risk reversal upon judicial review. Courts require agencies to “consider[] the relevant factors and articulate[] a rational connection between the facts found and the choice made.”152 Simply put, stating that an amount of GHG emissions appears significant without any objective support fails to meet the agency’s obligations under the Administrative Procedure Act (APA).

V.Conclusion

This concurrence is intended to assist the Commission, courts, and other parties in their consideration of the Commission’s obligations under the NGA and NEPA. The Commission cannot act ultra vires and claim more authority than the NGA provides it, regardless of the importance of the issue sought to be addressed.153 The NGA provides the Commission no authority to deny a certificate application based on the environmental effects from the upstream production or downstream use of natural gas. Congress enacted the NGA, and subsequent legislation, to ensure the Commission provided public access to natural gas. Further, Congress designed the NGA to preserve States’ authority to regulate the physical effects from the upstream production and downstream use of natural gas, and did not leave that field unregulated. Congress simply did not authorize the Commission to judge whether the upstream production or downstream use of gas will be too environmentally harmful.

Nor does the Commission have the ability to establish measures to mitigate GHG emissions. Pursuant to the Clean Air Act, Congress exclusively assigned that authority to the EPA and the States. Finally, the Commission has no objective basis for determining whether GHG emissions are significant that would satisfy the Commission’s APA obligations and survive judicial review.

I recognize that some believe the Commission should do more to address climate change. The Commission, an energy agency with a limited statutory authority, is not the appropriate authority to establish a new regulatory regime.

For these reasons, I respectfully concur.







                                               

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