Week Ending May 25, 2018

In Split Vote, FERC Alters GHG Emission Disclosure for Gas Pipelines

This Article Appears as Published in Foster Report No 3200
In Split Vote, FERC Alters GHG Emission Disclosure for Gas Pipelines

With two commissioners dissenting, FERC staked out a different position on assessing the environmental impacts of natural gas pipeline projects by not providing estimates of upstream and downstream greenhouse gas (GHG) emission data when such information is not reasonably foreseeable.

The policy position garnered dissenting statements from Commissioners Cheryl LaFleur and Richard Glick, who said the move limits FERC’s consideration of climate change impacts in pipeline projects, is contrary to the requirements of the National Environmental Policy Act (NEPA) and comes at a bad time, as FERC embarks on a review of its gas pipeline certificate policy under the Natural Gas Act (NGA).

The approach outlined in FERC’s order on rehearing for a Dominion Transmission Inc. project “violates NEPA’s requirement that federal agencies take ‘a hard look at [the] environmental consequences’ of their decisions,” Glick said in his statement dissenting in part to the order.

The Commission cannot ignore the upstream and downstream GHG emissions associated with new pipeline projects when the record lacks specific data tying those emissions to pipeline transportation, yet that is what the majority is choosing to do in the Dominion order, LaFleur said.

“If not for this policy shift that has little bearing on the record developed in this case, I would support today’s order as I continue to believe that this project is in the public interest,” she said.

The May 18 rehearing order (CP14-497) came nearly two years after Otsego 2000 sought rehearing of the original order approving the Dominion Transmission New Market expansion project to provide 112,000 Dth/d of firm transportation service to National Grid utilities Brooklyn Union Gas and Niagara Mohawk Power. The 2016 order found that the benefits of the project outweigh any adverse effects on existing shippers and an environmental assessment (EA) concluded that the project would not have a significant impact on the environment.

The project involved two new compressor stations, the expansion of the existing Brookman Corners compression station and modifications at two other existing compressor stations, all in New York State. Conservation and environmental group Otsego 2000 argued in its 5/31/16 rehearing request that FERC’s order was in error because it failed to prepare an Environmental Impact Statement (EIS), treated the Brookman Corner station additions as an expansion and not a new facility, and did not evaluate the upstream and downstream impacts of the project.[1]

Many of Otsego 2000’s members live in Minden, New York, near the Brookman Corners station, with an Amish community and an elementary school in close proximity, raising the concerns associated with emissions from a much bigger compressor station, said Nicole Dillingham, board president of the group.

“Obviously we’re disappointed with the decision” and Otsego 2000 is reviewing the order and its legal options for seeking a court appeal, she said.

“We are somewhat encouraged by the two dissents,” Dillingham said. It is not often that the group agrees with FERC commissioners, but LaFleur and Glick made strong points that FERC has an obligation to examine upstream and downstream environmental impacts of new facilities, she said.

Countering the view that the project involved a mere upgrade to the Brookman Corners compressor station, Otsego 2000 asserted that the expansion amounted to a new construction project that would have harmful impacts on nearby residents. It sought analysis of the upstream (production and hydraulic fracturing) and downstream impacts, with the downstream effects including any gas-fired power plant emissions, gas distribution network or storage facility operations. The group challenged FERC’s assertion that the upstream and downstream activities are not reasonably foreseeable.

FERC upheld its order on every challenge from Otsego 2000, noting that the Council on Environmental Quality (CEQ) and the courts have concluded that under NEPA, an impact is reasonably foreseeable if it is sufficiently likely to occur that a person of ordinary prudence would take it into account in reaching a decision. “While courts have held that NEPA requires ‘reasonable forecasting,’ an agency is not required ‘to engage in speculative analysis’ or ‘to do the impractical, if not enough information is available to permit meaningful consideration,’ ” FERC said.

The Commission does not have enough information on the general supply area for the gas that will be transported on the project to properly assess the upstream impact, FERC said, noting that the project involves gas from interconnections with Texas Eastern Transmission and Transcontinental Gas Pipe Line Corp., both of which cross numerous states and supply areas.

Similarly, on the downstream side, no party in the case has identified what the specific end-use of the gas will be, other than the gas distributors using it to meet their needs. So, the Commission does not know where the gas will be consumed or what fuels it will displace, unlike a case involving the Southeast Market Project (SMP) pipelines where almost all the gas was being sent to gas-fired generators. In that case, FERC was told by the U.S. Court of Appeals for the D.C. Circuit on remand to estimate the generators’ GHG emissions that the pipelines will make possible.

The record in the Dominion case does not support a finding that the potential increase in GHG emissions upstream or downstream of the project is clearly traceable to FERC approving the facilities, despite the dissenting commissioners’ claims otherwise, FERC said in the order. More specific information about the upstream and downstream uses of the gas is not available to FERC as production and consumption activities are outside of the Commission’s jurisdiction.

“We disagree with the dissent’s assertion” that FERC lacks that information simply because it did not ask for it, the majority noted in the order. FERC only has jurisdiction over the pipeline applicant, and while shippers might contract with a specific producer for their gas supplies, the shipper would not know the source of the producer’s gas or the exact production resource. Essentially, asking for such upstream information “would be an exercise in futility,” said the majority of three Republicans, Chairman Kevin McIntyre, Neil Chatterjee, and Robert Powelson.

The policy change comes after FERC, since 2017, had gone beyond what it deemed required by NEPA and provided the public with information on potential emission impacts associated with pipeline projects, even when upstream and downstream impacts were not reasonably foreseeable nor casually related to the projects. The GHG emission and other information provided in a series of certificate orders was generic, broad and “inherently speculative,” providing estimates of production and end-use effects under worst-case scenarios.

“However, providing a broad analysis based on generalized assumptions rather than reasonably specific information does not meaningfully inform the Commission’s project-specific review.  Nor is it helpful to the public if the Commission provides such broad and imprecise information,” FERC said. Doing that “muddles the scope of our obligations under NEPA” and the factors that should be analyzed for certificates under NGA Section 7(c).

Thus, to avoid confusion as the scope of obligations under NEPA and factors to be considered under Section 7(c), FERC will no longer provide broad estimates of upstream and downstream impacts of proposed projects.

The order says the dissenting commissioners mischaracterize the decision as changing FERC’s environmental review and consideration of the potentially severe consequences of climate change. Yet the EA in the case recommended mitigation measures to reduce GHG emissions. “We will continue to analyze upstream and downstream environmental effects when those effects are sufficiently causally connected to and are reasonably foreseeable effects of the proposed action, as contemplated by CEQ’s regulations,” FERC said.

In her dissenting statement, LaFleur noted that she voted to approve the Dominion project in 2016 and still believes it is in the public interest but dissented in part on the policy shift for emission disclosure and climate change impacts. Such effects are part of the public interest determination and LaFleur supports disclosing what the Commission can determine, even if it is estimates that are not precise.

That information, such as assumption of full combustion of all gas volumes being transported for downstream effects, was included in numerous NGA certificate orders when a project’s EIS or EA was completed without that information. “The majority’s reasoning for excluding the information and calculations is generally that it is inherently speculative and does not meaningfully inform the Commission’s project-specific review. I disagree,” LaFleur wrote.

The D.C. Circuit’s decision in the SMP case that included Sabal Trail Transmission clearly indicated that FERC should be doing more as part of its environmental reviews, and LaFleur believes that GHG emission impacts must be quantified and considered as part of the NEPA review process. She rejected the notion that if a specific end-use is not discernable FERC should not consider it in the public interest determination.

Although the upstream information is less clear and harder to trace than downstream impacts, LaFleur believes FERC should disclose whatever information is available, such as studies by the Department of Energy cited in previous orders.

“At a time when we are grappling with increasing concern regarding the climate impacts of pipeline infrastructure projects, the Commission should not change its policy on upstream and downstream impacts to provide less information and be less responsive.  Rather, I believe the Commission should proactively seek and disclose in pipeline proceedings more information regarding both upstream production and downstream end-use,” she said.

LaFleur added that she hopes the notice of inquiry on FERC’s certificate policy statement will provide a chance to consider what information FERC should factor into its environmental analyses of pipeline projects.

In his dissent, Glick asserted that FERC should be seeking more information and building a better record on environmental impacts associated with pipelines. The approach taken in the Dominion case violates NEPA’s requirement that federal agencies take a “hard look at environmental consequences” of their decisions. The reason FERC does not have meaningful upstream and downstream information in the case is that it did not ask for it, Glick said.

He conceded that there will be pipeline projects where GHG emissions are too speculative to be considered reasonably foreseeable, but countered that there also will be projects, such as in the Sabal Trail case, where an adequate record would make GHG emissions reasonably foreseeable. The question of what is reasonably foreseeable under NEPA is one that should be answered on a case-by-case basis, “not on generic pronouncements divorced from the facts of any specific case.” And unless the Commission makes its “best efforts” and asks the necessary questions, that record is unlikely to exist and Congress’ purposes in enacting NEPA will be undermined.

Glick referred to other court cases supporting his view that forecasting environmental impacts is a regular component of NEPA reviews and a reasonable estimate may inform the federal decision-making process even when an agency is not completely confident in the results of a forecast.

He dissented because he cannot support issuing a certificate when FERC has not made its best effort to collect information regarding GHG emissions associated with a pipeline project.

The majority’s view represents “another step toward drastically limiting the Commission’s consideration of climate change” in the pipeline certification process, and one that “falls short of our statutory responsibilities” under NEPA and the NGA, Glick said.

In the order, the majority said that NEPA “does not require the impractical,” and that the upstream and downstream impacts of the project are “so nebulous” that FERC could not forecast the likely effects. The EA in the original order is consistent with CEQ guidance and NEPA case law on the subject, FERC said.

All other aspects of Otsego 2000’s request for rehearing were also denied. The EA found that hazardous air pollutant emissions from normal operations and blowdown events at the Brookman Corners compressor are below a level of health concern and preparing an EIS would not have provided any meaningful information to assist in the decision-making process, FERC concluded.

Unlike other groups who seek complete blockage of new facilities, Otsego 2000 worked with Dominion to try and mitigate emission impacts of the Brookman Corners compressor addition, Dillingham said. Dominion initially committed to comply with local ordinances but in the end chose the cheapest solution and avoided efforts to reduce emissions. “They turned their back on this community,” she said.

However, the company could install emission mitigation measures after the project has been in service, she said.

FERC let the rehearing request sit while the project was built and placed in service, Dillingham added. That speaks to “the complete unfairness of the process,” she said.

The Sierra Club also took issue with the majority views expressed in the order, noting that the D.C. Circuit instructed the Commission to consider projects’ GHG emission impacts from downstream power plants in the Sabal Trail case. FERC is trying to evade the court’s directive and shirk its responsibilities, said Michael Brune, executive director of Sierra Club. The Commission has broken the public’s trust and Sierra Club is exploring its options in response to the rehearing order, Brune said in a statement.

“FERC is like the child who would rather stuff everything under their bed than clean their room. Unfortunately, when it comes to climate change, out of sight is not out of mind,” he said.

By Tom Tiernan TTiernan@fosterreport.com

[1]   For a past story, see, Parties of Every Stripe, including Attorneys General, Line Up in Contests with Constitution Pipeline, Atlantic Bridge, ANE, Dominion’s New Market Project, and the Rover Pipelines, FR No. 3103, pp. 1-7.

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