Week Ending March 19, 2021

GHG Emission Analysis Change on Gas Pipelines Prompts Exchange Between Glick, Danly

This Article Appears as Published in Foster Report No 3341
GHG Emission Analysis Change on Gas Pipelines Prompts Exchange Between Glick, Danly

In a change to how FERC assesses the significance of greenhouse gas (GHG) emissions associated with natural gas pipelines, the Commission found that a pipeline project’s emissions would not result in a significant contribution towards climate change.

It marked the first time FERC analyzed emissions related to a gas pipeline in the context of climate change, FERC Chairman Richard Glick said March 18. The ruling reverses the Commission’s “unlawful course” that it had set in 2018 in not fully analyzing GHG emissions associated with pipelines regarding the effects on climate change, he said.

The change in course was made on FERC’s approval of a Northern Natural Gas Co. pipeline replacement project, where the assessment of the emissions was fairly easy since it does not involve new pipeline capacity and the only emissions would be from construction activities and operation of the pipeline. That is not why the case was chosen, however, Glick said after the March 18 open meeting.

A majority of commissioners were ready to make the change, and Glick did not want to wait for the conclusion of a Notice of Inquiry (NOI) on FERC’s pipeline certificate policy statement, he said. The majority was created when Commissioner Neil Chatterjee, a Republican, joined Glick and Commissioner Allison Clements, both Democrats, in supporting the change.

The policy switch did not sit well with Commissioner James Danly, a Republican, who had an exchange with Glick during the meeting and dissented or concurred on 14 orders approved during the meeting. The change in policy came in a relatively obscure case, similar to when FERC in 2018 announced a change in GHG emission analysis involving Dominion Transmission Inc.’s New Market Project in New York state. That history and the change made without advance notice to parties, just as FERC did in 2018, led to the discussion between Glick and Danly during the meeting.

Danly said everyone that has an interest in any pipeline case should intervene at FERC in every proceeding to protect their legal standing. Making a “dramatic change” in policy on assessing the significance of GHG emissions in a routine pipeline case does not meet the requirements of the Administrative Procedure Act (APA) and the reasoning in the order is not legally sound, Danly said. No party was aware of a possible change to be made in the Northern Natural case (CP20-478), and to avoid being left out of future determinations, he said parties should make a practice of intervening in every pipeline case before FERC.

Danly indicated that he would list every pipeline certificate case before FERC in his separate statement on the order, which had not been issued at press time March 19.

The lone group that protested the policy change in 2018 in the Dominion New Market project, which came on a rehearing order, raised similar APA concerns when the case went to the U.S. Court of Appeals for the D.C. Circuit. Otsego 2000 told the court that FERC violated the APA, which requires agencies to give notice of proposed policy changes and allow public comment. The group asserted that FERC denied due process to stakeholders across the nation who had no notice of the Commission’s plan until it was too late to intervene in the Dominion case.

Glick referred to this when he said Danly’s protests against the policy change are “the height of hypocrisy,” since Danly was general counsel at FERC in 2018, when the change was made in the Dominion case. Landowners, environmental groups and others have been “screwed” by that policy change, Glick said, acknowledging the harsh language as indicative of his strong feelings on the subject.

The NOI on the certificate policy statement was pending and a few months into it when the GHG emission analysis change was made in 2018, Glick noted.

As general counsel in 2018, “I was not voting on orders,” Danly countered, adding that the difference in roles between general counsel and commissioners should be acknowledged. Glick did so during the meeting.

Danly said this marks the second major policy change in an individual pipeline proceeding under Glick, which is another factor indicating massive interventions are needed to ensure legal standing to challenge such orders.

Glick responded that when there is a majority of votes, FERC should issue orders and not sit on them. It would not make sense to tell Northern Natural or other pipeline applicants that the Commission will not vote on their projects until the certificate policy statement proceeding is finished. “If we have votes to go in a different direction we should,” Glick said, adding that Danly was chairman and has experience in setting agendas.

Danly agreed that “sitting on orders” is not good policy, and he brought votes on matters while he was chairman knowing that they may be voted down. “I’m willing to take my lumps” for trying to advance policies he supported, and some credit should be given to him on that, Danly said.

Glick said he enjoys the exchange of views with Danly and other commissioners.

The certificate policy statement NOI is still pending, and Glick said the revised approach on GHG emissions is designed to address cases that come before FERC in the meantime. It makes no sense to hold orders when three commissioners agree that a change is needed, Glick said.

The change follows the directive of the D.C. Circuit that has been ignored in the past about examining GHG emissions in pipeline certificate applications under the Natural Gas Act, Glick said during the meeting and in a press conference afterwards.

FERC will examine GHG emission effects on a case-by-case basis, and use different metrics as needed, Glick said. In the case of Northern Natural’s pipeline replacement project approved at the meeting, the call was fairly easy to make based on an “eyeball” examination, since the project did not involve new pipeline capacity or an extensive project, Glick said. Future considerations of GHG emissions could use the social cost of carbon calculations or other tools to reach decisions on the effects of NGA applications in relation to climate change, he noted.

The order found no significant impact of GHG emissions affecting climate change associated with the Northern Natural project. Other projects may have more significant levels of GHG emissions and those could be mitigated or be part of a balancing process to examine benefits and adverse effects of pipeline projects, Glick explained. FERC will examine each case for the GHG emission effects related to climate change, and every project may not be approved in the future, he said.

When former commissioner Cheryl LaFleur was at FERC following the 2018 policy change, she would make her own calculations for the emission effects of projects related to emissions in the region and the impact on climate change. Her own individual analysis was LaFleur’s way of examining the costs and benefits of projects before voting on them.

Danly dissented in part and concurred in part with the Northern Natural order and Commissioner Mark Christie, a Republican, concurred in part.

“This is a bipartisan step forward,” and the order represents “a pragmatic compromise” on GHG emission reviews for pipelines, Chatterjee said during the meeting, which started more than an hour late.

Chatterjee supported the 2018 policy switch, so his vote in favor of the Northern Natural order marks a change. He deemed past orders legally strong, while stating that policies can evolve.

“We need not engage in a false choice” between energy infrastructure and addressing climate change, Chatterjee said. If commissioners retreat to “extreme partisan corners,” the American people will lose out by not having infrastructure projects addressed, Chatterjee said.

In some future pipeline project, even if a GHG emission analysis finds a significant impact on climate change, FERC is not constrained from finding that the benefits of the project outweigh the costs, Chatterjee said.

During the press conference, Glick praised Chatterjee for reaching agreement and working out a compromise on emission analyses, as Chatterjee sought to do in the past. “He’s been a man of his word,” Glick said of Chatterjee.

Under the new policy, FERC will treat GHG emissions and their contribution to climate change the same as all other environmental effects that FERC examines, Glick said.  “A proposed pipeline’s contribution to climate change is one of its most consequential environmental impacts and we must consider all evidence in the record—both qualitative and quantitative—to assess the significance of that impact.  I look forward to continuing to work with my colleagues as we refine our methods for doing so,” Glick said in a statement.

The order shows that a thorough GHG emission analysis does not have to doom a project from being approved, Glick said at the meeting. “I believe many companies will welcome what we’re doing today,” he said.

The NOI could take a significant amount of time to reach any conclusion on the 1999 pipeline certificate policy statement. That process will continue, but it does not mean FERC should not change course when there is agreement to do so, Glick said.

Clements picked up on that line of reasoning in her remarks at the meeting. She is committed to working with colleagues to develop a comprehensive framework for analyzing GHG emissions associated with pipelines, and there is work yet to do in the NOI proceeding.

However, the Northern Natural order is a step in acknowledging FERC’s obligation to fully consider GHG emission effects in compliance with the NGA and the National Environmental Policies Act, Clements said. The D.C. Circuit’s 2017 ruling involving Sabal Trail Transmission put everyone on notice that FERC needs to make a more thorough analysis of GHG emissions associated with gas pipelines, she said.

Clements is spearheading FERC’s formation of an Office of Public Participation and noted that the March 17 “listening session” on that effort, with comments from many parties, provided an example of the challenges associated with intervening in multiple cases, as suggested by Danly. Stories shared by landowners and others who are frustrated with processes at FERC illustrate how it is not possible for parties to intervene in every certificate case that comes before the Commission, Clements said.

The Northern Natural case involves replacement of pipeline facilities to enhance safety, security and operational efficiency on the system. The order approves Northern Natural’s request involving about 87 miles of replacement pipeline facilities along the border of South Dakota and Nebraska. The application for the South Sioux City to Sioux Falls A-Line Replacement Project was made in June of 2020.

By Tom Tiernan ttiernan@fosterreport.com

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