FERC by a 3-2 vote has denied a request for rehearing of its April 2016 decision to issue a certificate of public convenience and necessity for Dominion Transmission Inc.'s New Market project, with the majority declaring that it will continue to take into account proposed pipelines' potential greenhouse gas (GHG) emissions, but not their impacts on natural gas production and consumption.
The National Environmental Policy Act (NEPA) requires federal agencies to consider indirect impacts of projects. Since a 2017 decision of the U.S. Court of Appeals for the District of Columbia Circuit found that downstream GHG emissions from burning natural gas are indirect impacts, the Federal Energy Regulatory Commission has taken that requirement a step further, the majority said in an order issued last Friday [CP14-497].
In recent cases, FERC has provided "the public with information regarding the potential impacts associated with unconventional natural gas production and downstream combustion of natural gas, even where such production and downstream use was not reasonably foreseeable nor causally related to the proposals at issue." But that practice is coming to an end, the three Republican commissioners said.
"That information was generic in nature and inherently speculative, providing upper-bound estimates of upstream and downstream effects using general shale gas well information and worst-case scenarios of peak use," the Commission wrote in the order.
"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. Rather, doing so muddles the scope of our obligations under NEPA...
"[W]e will no longer prepare upper-bound estimates...where, as here, the upstream production and downstream use of natural gas are not cumulative or indirect impacts of the proposed pipeline project, and consequently are outside the scope of our NEPA analysis."
The two Democrats on the Commission -- Cheryl LaFleur and Richard Glick -- voted against the order. LaFleur supported the original authorization of the New Market Project and both she and Glick said they might have voted for the order denying rehearing if not for the policy shift attached to it. A project's upstream and downstream natural gas production and consumption are indirect impacts that should be considered when reviewing applications, they said.
"As I have said repeatedly, deciding whether a project is in the public interest requires a careful balancing of the economic need for the project and all of its environmental impacts," LaFleur wrote in her dissenting opinion. "Climate change impacts of GHG emissions are environmental effects of a project and are part of my public interest determination."
The majority opinion reverses FERC's recent approach to environmental reviews, according to LaFleur.
"Rather than taking a broader look at upstream and downstream impacts, the majority has decided as a matter of policy to remove, in most instances, any consideration of upstream or downstream impacts associated with a proposed project. 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."
The majority said its decision does not change FERC's public interest and environmental review. "Our decision does not in any way indicate that the Commission does not consider, or is not cognizant of the potentially severe consequences of climate change," they said.
The decision comes as FERC prepares to review its 1999 Pipeline Policy Statement.
Last month, the Commission issued a notice of inquiry (NOI) that could lead to a revision of its policies regarding the review and authorization of interstate natural gas transportation facilities under section 7 of the Natural Gas Act [PL18-1]. The NOI was issued to examine FERC policies in light of changes in the natural gas industry and increased stakeholder interest in how the Commission reviews natural gas pipeline proposals since it adopted its current policy statement on pipeline certification nearly two decades ago. Comments on the NOI are due within 60 days of its publication in the Federal Register.
The Sierra Club warned that FERC's decision in the New Market project case may face court challenges.
"The people demanded that FERC do its job, and FERC refused. Then, the courts ordered FERC to do its job, but instead, it just keeps trying to evade the court's order and shirk its responsibilities," the Sierra Club said Friday. "FERC has broken the public's trust, and we are exploring our options in response to today's vote."
Dominion first asked for FERC approval of the New Market project in 2014. FERC staff issued an environmental assessment (EA) for the project in 2015, and gave Dominion permission to begin construction in upstate New York in March 2017, with a target in-service date eight months later. The $159 million project was designed to provide 112,000 Dth/d of firm transportation service, improve access for two National Grid subsidiaries, and add more than 33,000 hp of compression.