Another Baffling FERC Meeting – But There Was Progress

Originally published for customers September 22, 2023

FERC held its open meeting yesterday and on the agenda were six items related to pipeline and LNG certificates. Four of the items on the agenda had also been on the agenda for the July open meeting, but were among five items that had been pulled from consideration at that meeting due to an apparent conflict between the two centrist commissioners (Phillips and Christie) and the ones on each extreme (Danly and Clements).

While the issuance of four decisions is a positive step for those projects, one project that was pulled from the July agenda did not make yesterday’s agenda. The reasons for the omission of that project remain a mystery and FERC’s refusal to approve the other four using a faster, less formal process called “notational voting” unnecessarily delayed the approved projects by almost two months.

The Four Certificate Projects That Finally Got a Vote

Following the last FERC open meeting in July, we wrote in FERC Tries to Clear Pipeline Project Backlog, but Republican Commissioner Says No that the dysfunction that ruled FERC during the Chairman Glick era seemed to have been slain by acting Chairman Phillips until he was forced at that meeting, apparently by Commissioner Danly, to pull from the agenda five projects that had been scheduled for a decision.

Four of those five projects, Port Arthur LNG Expansion Project, Northern Lights 2023 Expansion, Venice Extension Project and a bookkeeping expansion of the Calcasieu Pass LNG terminal, were relisted on this month’s agenda and finally got a vote.

Given that these projects were apparently ready for a decision in July and were approved this month, it seems almost inexcusable that they were not issued a certificate during the two month hiatus between FERC open meetings. As we noted back in 2020, in FERC Delays Issuing Certificate Orders - A New Factor for Project Timelines?, prior to 2018 almost all FERC pipeline projects were approved through a process called “notational” voting. That allows FERC to act on an order between open meetings. The process requires merely a “quorum” of commissioners to agree to act on an order and then it can be issued. It remains unclear why this method of issuing orders changed so dramatically in 2018, but the failure to use it for these four projects seems particularly inappropriate given that they were clearly ready to be approved in July. Making a project wait an extra two months could set a project back at least a year if they are unable to meet certain time of year restrictions or because they lose a key summertime construction season.

One Project Still Doesn’t Get a Vote

The only project that was pulled from the July agenda and not even included in the September agenda was Gas Transmission Northwest’s GTN XPress Project. Speculation about why it has not been able to get approval is rampant. It has been opposed by a number of the states in the region and by some of the U.S. senators representing the region, but generally has the support of the politicians for the areas that actually will receive service. There has been evidence submitted that the pipeline is not “needed” but like most projects it has binding precedent agreements in place, here with two local gas distribution companies and one natural gas producer for the entire 150,000 dth/day of additional capacity that it will create. Under the existing certificate policy statement this should be all that is required to establish that the project is needed and the other evidence arguing against the need should be irrelevant.

In a June letter pleading for immediate action, the project sponsor noted: (1) that it has already received all requisite federal, state, and local approvals necessary to proceed with construction of the project; (2) the project will not require the use of eminent domain as no permanent or temporary easements from landowners are necessary; and (3) FERC issued its Final EIS on November 18, 2022, concluding that “the Project would not result in significant environmental impacts with the exception of potential impacts on climate change,” which Commission staff did not determine as significant or insignificant.

The project has been under consideration at FERC for 717 days which gives it the dubious distinction of being the project that has lingered at FERC the longest of any projects of 150,000 dth/day or less in our entire data set, other than the ExC Project, which was of comparable size, 125,000 dth/day, but lingered at FERC for 781 days.

ExC also suffered from challenges about its need, but all four of the current commissioners eventually found their way to support the issuance of its certificate, joined even by former Chairman Glick. However, support by Chairman Glick and Commissioner Clements appeared to be premised on the finding that ExC would actually reduce greenhouse gas emissions. The same cannot be said about GTN Xpress, where FERC staff found that the project’s operational and reasonably foreseeable downstream GHG emissions would be approximately 2.2 million metric tons, which “could potentially increase emissions by 8.4 percent based on the state of Idaho 2020 levels; by 0.8 percent based on the state of Washington 2020 levels; and by 1.3 percent based on the state of Oregon 2020 levels.”

The presumption is that Commissioner Clements will not vote in favor of the certificate, but that should leave three votes in favor to her one against. However, as we noted following the July meeting, a key stumbling block seems to be Commissioner Danly.

Danly’s and Clements’s Dissents

In the movie The Princess Bride, Inigo Montoya notes to one of his compatriots, “You keep using that word. I do not think it means what you think it means.” The same can be said with respect to some of Commissioners Danly’s and Clements’s recent dissents. For instance, at July’s meeting, Commissioner Danly issued a “dissent” in the Southside Reliability Enhancement Project, but begins that “dissent” by stating that he agrees “with the Commission’s decision to grant Transcontinental Gas Pipe Line Company, LLC (Transco) an authorization under section 7(c) of the Natural Gas Act.” By definition, the rest of the opinion is a concurrence. Similarly, Commissioner Clements at the June meeting issued a dissent in Ohio Valley Connector Expansion Project which similarly began with “I concur with the result of today’s Order.”

If you look past the title of the often separate opinions written by the current commissioners, you find that for every project on which they have voted as a group, they have reached the same conclusion that the project should be approved, i.e. no real dissent.

Petulance Hiding as Principle

What is also noticeable, however, is that certain commissioners feel a need to regularly write separately rather than just voting in favor of the Commission decision. This need to dispute aspects of every order, along with failure to comprehend the difference between a dissent and concurrence, is more than just semantics because it appears to be hampering the ability of the Commission to act timely on the matters before it.

As we are writing this early on Friday morning, we still only have one of the four decisions that were supposedly issued yesterday. But in that one decision, involving the Port Arthur LNG Expansion, we see that Commissioner Danly and Commissioner Clements continue with their practice of approving the projects, but then writing a “dissent.” Their “dissents” are about former Chairman Glick’s failed greenhouse gas policy. Commissioner Danly would like FERC to firmly state that it has been relegated to the dustbin of history and Commissioner Clements would like the Commission to resuscitate it so that FERC can properly assess the impacts of GHGs and order proper mitigation. Thankfully, the two centrists just followed the recent practice of calculating the emissions, comparing them to regional and national emissions, refusing to convert them to a social cost of carbon and then declaring that there is no way to determine the significance of the 3,277,826 metric tons of CO2e that would be produced annually.

Notational Voting

At this month’s meeting there were two items pulled from the agenda. Both of them concerned FERC’s prior approval of two LNG terminals, Rio Grande LNG and Texas LNG. In both cases, FERC’s original order had been appealed to the DC Circuit, which had declined to void the original order but sent the proceeding back to FERC for further consideration of two issues, climate change and environmental justice. In April, FERC had issued an order in each case addressing the DC Circuit’s concerns but those orders were also challenged.

The two items on the agenda would appear to have been an order addressing the rehearing requests regarding FERC’s April order. At the very end of the meeting, Commissioner Danly made a motion to schedule a Commission meeting for next Friday to address these matters, but no other commissioner supported that idea. Instead, Chairman Phillips committed to using the notational process we describe above to move those orders out by the end of next week. If GTN Xpress cannot get similar treatment between now and FERC’s open meeting in October, we fear that acting Chairman Phillips has not yet returned FERC to a fully functional Commission.