Week Ending May 21, 2021

FERC Meeting Devolves Into Exchange of Views on Pipeline Certificate Orders

This Article Appears as Published in Foster Report No 3350
FERC Meeting Devolves Into Exchange of Views on Pipeline Certificate Orders

The differing views among FERC commissioners on natural gas pipeline certificate orders came to a head during the May 20 meeting, with heated remarks about the Commission’s process and airing behind-the-scenes negotiations on wording of orders involving Northern Natural Gas Co. and Tuscarora Gas Transmission Co.

In a rarity for FERC based on the last several years of open meetings, the two pipeline orders were amended during the meeting. Commissioner James Danly brought the amendment based on his desire to ensure that the analysis of greenhouse gas (GHG) emissions and impact on climate change would not set a precedent going forward. He said he presented the amendment during the meeting after suggested edits of the draft orders were not accepted.

Commissioners Neil Chatterjee and Allison Clements had some harsh words about Danly not bringing the amendment forward before the meeting. “I’m very disappointed in how this went down,” Chatterjee said. “This is not a game,” Chatterjee said, adding that “this will roil markets,” when it appeared that the two draft orders would not be voted out.

Clements questioned whether the amendment was made in good faith, and said if it were pursued in regular order before the meeting, she likely would have supported it.

During the vote on the amended wording, essentially adding a sentence that the GHG analysis of the projects is for information purposes only and shall not serve as a precedent for future orders, Clements did not participate. The amendments were adopted by a 4-0 vote.

In the votes for the orders as amended, Clements and Chairman Richard Glick dissented in part and concurred in part. They both believe that FERC should have conducted an environmental impact statement (EIS) for the projects, and were willing to concur and dissent on the draft orders that did not gain three votes.

The resulting orders approve two pipeline projects without an EIS, with Glick and Clements stating that the GHG emission calculations merited the closer examination through an EIS. The Northern Natural and Tuscarora projects gained approval, but the road to get there took some twists and turns. When the meeting began (about 35 minutes late, which is not that unusual these days), it looked like the two draft orders would not be approved, with Glick and Chatterjee expressing disappointment and frustration.

Danly said he could not support the draft orders as presented at the meeting because they are “legally infirm” and fail under the requirements of the Administrative Procedures Act because they do not properly acknowledge the pending notice of inquiry (NOI) on FERC’s gas pipeline certificate policy statement. He said he does not want FERC to set a precedent during the pendency of the NOI, which has been renewed with a comment period that is ongoing.

It became clear during the discussion that without the amended wording, Danly would not support the orders, which would prevent the three needed votes among the five commissioners to approve the projects. If the added sentence is what it took to get the three votes, it should have been offered before the meeting, Chatterjee said. He questioned the “methods and tactics” about late wording changes before a vote, acknowledging that he helped use them during his time in the U.S. Senate, but they should not be used for regulatory bodies.

Chatterjee, who took part in the online meeting from Lake Tahoe, Nevada, said commissioners need to be pragmatic and always keep in mind the needs of energy consumers. “I favor compromise and cooperation,” because “there’s nothing productive about sitting in separate corners and insisting on getting 100% of what we’d like to see.”

Glick referred to a previous Northern Natural project that did not involve new pipeline capacity, where FERC was able to make a finding that the project would not affect climate change because as a pipeline replacement project, the GHG emissions would be minimal. The emissions associated with the latest Northern Natural addition in Minnesota, as part of the Northern Lights expansion, and the Tuscarora project in Nevada are more substantial and require more analysis, Glick said.

When it looked like the draft orders would not be approved, Glick said it is unfortunate that a majority could not be gained for a particular approach. “I think the ghost of the previous administration’s aversion to talking about climate change still hangs over our pipeline certification process,” Glick said when the two orders were discussed. He commended Chatterjee for trying to reach a compromise.

As he has in the past, Glick said even if there is a fuller analysis of GHG emissions and a majority concludes that a pipeline project has a significant effect on climate change, the project could still gain approval. FERC could include mitigation measures in any order granting a certificate, a pipeline owner could propose mitigation separately or the Commission could conclude that the benefits of a project outweigh the significant impacts on climate change.

Danly proposed the amendment “to alleviate my colleagues’ frustration.” He refuted the notion that he was bringing forth new wording for an order to be deceptive. There can be no deception when an amendment is submitted for deliberation in a public forum, Danly said. He said he engaged in plenty of discussion with Glick and sought repeated edits that were in essence the contents of the amendment.

During the meeting and a press conference afterwards, Glick said the draft orders were not breaking new ground on GHG emission analysis, listing the calculations for emissions as FERC has been doing for several years, without a full assessment of the impact on climate change. The orders were drafted to follow the process laid out when former Commissioners Cheryl LaFleur, Bernard McNamee and Chatterjee reached agreement about GHG emission calculations, without a fuller analysis or finding of significance related to climate change, Glick said.  The draft orders before the amendment were consistent with past orders on pipeline projects, he said.

Commissioner Mark Christie said the debate shows that FERC should address the broad legal issues associated with GHG emissions in the NOI and not in individual proceedings. “These projects are needed,” he said in reference to the Northern Natural and Tuscarora facilities, and no commissioner believes they are not needed. Yet the GHG issue debate looked like it was going to hold up the orders from being approved. “Some members refuse to honor the process,” Christie said when it looked like the orders would not gain approval.

Christie believes that GHG analysis and climate change significance findings for Natural Gas Act certificate orders should be addressed in the policy statement NOI and not individual projects.

Glick agreed that it is incumbent on FERC to move quickly on the NOI, though he noted that the comment period is still open and a review of comments can take some time.

When asked about FERC review of pipeline projects while the NOI is pending during the press conference, Glick said the reviews will be on a case-by-case basis. When GHG emissions are “de minimis,” an EIS is not needed, but there are a lot of variables that go in to such determinations and they will be made in individual cases, he said.

The Northern Natural and Tuscarora orders do not come in proceedings that were protested, so there is no risk that a court review would send them back on remand, Glick noted.

Chatterjee commended Glick for putting the Northern Natural and Tuscarora projects on the agenda when he was prepared to be on the losing end of a vote. “He could have sat on them” and prevented the orders from going out, Chatterjee said.

Glick made that same point during the press conference, stating that when Danly was chairman, Danly would not bring some items for a vote. “That’s the wrong way for a chairman to act,” and the better approach is to call for votes and “let the chips fall where they may,” Glick said.

When Glick questioned whether Danly was out of order in bringing an amendment up during the meeting, noting that it has not been done for several years, Danly said FERC is a deliberative body and consideration of wording changes in a public forum is perfectly reasonable. There can be a back-and-forth exchange of views and changes of orders, Danly said. “I regret that I had to do this, but I did,” he said following the approval of the orders.

Stretching back at least 10 years or more, orders at open meetings would not be tweaked or changed, with the drafting and wording finalized before the meetings began. In the early 2000s and before then, some commission meetings had draft orders changed during the meetings, with wording changes and amendments.

The end result is FERC approving the two pipeline projects, but Chatterjee and Glick acknowledged that the process to get there was not pretty. Clements also brought up the culture and congenial atmosphere among commissioners. The Commission did not live up to that standard during the discussion at the meeting, she said.

The orders were issued late May 20.

The Northern Natural project (CP20-503) involves construction and operation of a 24-inch diameter pipeline extension and loop, totaling 1.43 miles in Minnesota, replacement and operation of a smaller branch line, a new compressor station and modifications with added compression at an existing compressor station. Once completed, the facilities would provide incremental winter peak day firm service of 45,693 Dth/day serving residential, commercial, and industrial customer market growth.

The Tuscarora Xpress expansion project (CP20-486) would provide 15,000 Dth/d of firm transportation service from an interconnect with Gas Transmission Northwest LLC in Klamath, County, Oregon, to an interconnect with Paiute Pipeline Co. in Nevada. It involves replacement of a 600-horsepower compressor unit with a 1,380-hp compressor unit at the existing Wadsworth Compressor Station in Washoe County, Nevada.

By Tom Tiernan ttiernan@fosterreport.com

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