The long-standing practice of the Federal Energy Regulatory Commission (FERC) justifying the need for a new pipeline by over relying on a pipeline’s plans to sell gas to an associated company (e.g., precedent agreements) to establish market need was called into serious question by the DC Circuit Court of Appeals in a decision released June 22. The case involved the Spire STL, a 65-mile natural gas pipeline from Illinois to the St. Louis, Missouri area that was approved by FERC in November 2018 and began operations in November 2019. The challenge to Spire STL was brought by the Environmental Defense Fund (EDF).
In its unanimous, monumental decision, the three-judge panel stated:
“Under the circumstances presented in this case – with flat demand as conceded by all parties, no Commission finding that a new pipeline would reduce costs, and a single precedent agreement between affiliates – we agree with EDF that the Commission’s approach did not reflect reasoned and principled decision-making.”
The court further said that FERC had “ignored record evidence of self-dealing and failed to seriously and thoroughly conduct the interest-balancing required by its own Certificate Policy Statement”
FERC Chairman Richard Glick, who as a commissioner had dissented from approving a certificate for Spire STL in 2018, said about the DC Circuit’s ruling:
“Today’s decision shows when FERC cuts corners, it puts its decisions & investments made on those decisions, at substantial risk.”
The now-cancelled Atlantic Coast Pipeline had, like Spire STL, relied heavily on precedent agreements to justify that its project was needed. The court’s decision remands the future of Spire STL back to FERC for further proceedings. For a copy of the decision, click here. For further insights, click here.