Rio Grande LNG Rehearing Denial Raises New Issues for FERC

In rejecting rehearing requests about the Rio Grande LNG project (FERC Docket CP16-454) and related Rio Bravo Pipeline (Docket CP16-455) at its January 23 meeting, FERC raised new issues about its review of project certificates, which again pitted Commissioners Richard Glick and Bernard McNamee against each other.

While they agreed that the speed of the rejection—31 days—represents an important improvement in project review (see related article), they disagreed about the validity of and broad application of the reasons for rejecting the rehearing.

"I have several concerns," said Glick, who dissented on the 2-1 decision.

First, he turned to the familiar issue of greenhouse gas impacts, saying that the Commission continues to fail to fully consider climate change. The Rio Grande LNG liquefaction plant at full capacity of 27 million metric tons/year would generate an estimated 9 million metric tons/year of greenhouse gases, he said, or the equivalent of 2 million cars/year.

But FERC continues to argue, according to Glick, that it cannot assess if that level of emissions is significant, nor can it require the project developer to mitigate them even if they are found to be significant. "Commissioner McNamee says we don't have the authority over emissions, that EPA has the authority," said Glick at the open meeting. "I don't contest that FERC doesn't have authority over emissions, and we don't have authority over wetlands, air quality, water quality either - but we seem to be able to require mitigation [for those impacts]. Somehow, we treat GHG differently than every other environmental impact."

McNamee responded in his opening remarks by saying that Glick is missing the "nuance" of the situation that makes GHG emissions different than mitigation of something like a damaged wetlands area. "On things like wetlands, or noise impacts, for example, there is another [federal] agency that establishes standards and the mitigation. We usually rely on the other agency," McNamee said. "In the case of GHG, where there is no standard out there, we do not have authority, and neither does EPA."

Without a standard, FERC cannot judge how to mitigate the emissions, McNamee said. It's simply not the same as requiring a certain amount of wetlands restoration to mitigate the loss of certain amount of wetlands.

Glick's other major dissent point is that FERC erred in its original approval—and admitted it erred—and has not corrected its mistake. "When we first issued the project approvals in November, the Commission concluded that ozone emissions associated with the projects weren't significant. But rehearing parties pointed out that we got that wrong - and the Commission admits that we got it wrong," Glick said. "But then we don't do anything about it - no mitigation, no action whatsoever."

In rejecting the rehearing, Glick said that all the commissioners agree that ozone-creating emissions will affect residents living near the LNG facility. But Glick then said the majority (McNamee and Chairman Neal Chatterjee) arrived at a conclusion that he finds illogical—that because almost all of those residents are racial minorities and/or low-income, the project won't have a disproportionate impact on them, compared to the general population.

Glick called this "a pretty twisted view of environmental justice…. So, we are essentially saying we will locate these facilities into low-income minority communities because there's no social justice impact…. That is not what Congress told us to do."

McNamee said that he agrees that environmental justice "is a very important issue," and he said, "The points that Commissioner Glick has identified are well-taken, in terms of the logic that if everyone in a group of people is impacted are the same, what are you comparing to?"

But McNamee said that, again, this is a nuanced situation. He said that the LNG liquefaction terminal is being proposed for a specific location because of the features of the Brownsville Ship channel, not because it will be near low-income residents with little political power. "It's not targeting those communities," he said.

Reprinted from PointLogic News. For more natural gas news from IHS Markit, visit the PointLogic website.

Kevin Adler is an editorial director for natural gas at IHS Markit.

Posted 14 February 2020.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.