In re Spire STL Pipeline LLC
| Decision Date | 15 December 2022 |
| Docket Number | CP17-40-006 |
| Citation | 181 FERC ¶ 61, 232 |
| Parties | Spire STL Pipeline LLC |
| Court | Federal Energy Regulatory Commission |
Before Commissioners: Richard Glick, Chairman; James P. Danly Allison Clements, Mark C. Christie, and Willie L. Phillips.
1. This case is before the Commission on remand from the United States Court of Appeals for the District of Columbia Circuit.[1] The court vacated and remanded the Commission's orders authorizing the construction and operation of the Spire STL Pipeline Project (Spire STL Pipeline)[2] for failing to demonstrate the need for the project and balance the benefits and adverse effects of the project under the Commission's Certificate Policy Statement.[3] For the reasons discussed below, we find that Spire STL Pipeline Project is needed and that the benefits outweigh the adverse impacts. Accordingly, we reissue a certificate of public convenience and necessity to Spire STL Pipeline LLC (Spire).
1. Background
2. On January 26, 2017, Spire filed an application under section 7(c) of the NGA[4]and Part 157 of the Commission's regulations[5] requesting authorization to construct and operate the Spire STL Pipeline, a new, 65-mile-long interstate natural gas pipeline system, extending from an interconnection with Rockies Express Pipeline LLC (REX) in Scott County, Illinois, to interconnections with Spire Missouri Inc., (Spire Missouri), an affiliate of Spire,[6] and Enable Mississippi River Transmission LLC (MRT) in St. Louis County, Missouri. The Spire STL Pipeline, which is designed to provide up to 400,000 dekatherms per day (Dth/d) of firm transportation service to the St. Louis metropolitan area, eastern Missouri, and southwestern Illinois, is composed of two segments: (1) a 24-inch-diameter, 59-mile-long segment originating at a new interconnection with REX and terminating at a new interconnection with Spire Missouri's Lange Delivery Station; and (2) a 24-inch-diameter, 6-mile-long segment originating at Spire Missouri's Lange interconnection and terminating at a new bidirectional interconnection with both MRT and Spire Missouri at the Chain of Rocks Delivery Station (North County Extension). The project includes three new aboveground meter and regulating stations: (1) the REX Receipt Station; (2) the Lange Delivery Station; and (3) the bidirectional Chain of Rocks Delivery Station (with separate meters for MRT and Spire Missouri), as well as interconnection facilities, and other appurtenant facilities.
3. Spire executed a binding precedent agreement with Spire Missouri for 350,000 Dth/d of firm transportation service representing 87.5% of the total design capacity of the project. Spire Missouri provides natural gas distribution service to approximately 650,000 residential, commercial, and industrial customers in the St. Louis metropolitan area and surrounding counties in eastern Missouri. Protesters challenged the need for the Spire STL Pipeline, arguing that a single precedent agreement with an affiliate is insufficient to demonstrate need, particularly when the project does not serve increased demand in the St. Louis market and existing infrastructure can meet the project purpose.[7]
4. On August 3, 2018, the Commission issued Spire a certificate of public convenience and necessity under section 7(c) of the NGA[8] to construct and operate the Spire STL Pipeline.[9] The Commission stated it would not look behind the precedent agreement and found that the benefits of the project outweighed the potential adverse effects. Following project construction, the Commission authorized Spire to commence service on the majority of the Spire STL Pipeline on November 14, 2019.[10]
5. The Environmental Defense Fund (EDF), Missouri Public Service Commission (Missouri PSC), and Juli Steck each filed timely requests for rehearing.[11] EDF asserted that the Commission failed to comply with the Certificate Policy Statement by relying on an affiliate precedent agreement to establish need, and that doing so would result in over building. EDF also argued that the Commission failed to balance the project's impacts on existing pipelines and their customers and on landowners and the environment. The Missouri PSC argued that the 14% return on equity authorized by the Commission was unsupported and would result in excessive rates. Ms. Steck asserted that the Commission's environmental review did not comply with the National Environmental Policy Act of 1969 (NEPA).
6. On November 21, 2019, the Commission issued an order on rehearing affirming the underlying determination that Spire had provided a sufficient demonstration of need for the project.[12] The order explained that precedent agreements with affiliated shippers are sufficient to demonstrate need [13] and concluded that a 14% return on equity is consistent with Commission precedent for greenfield pipelines, like Spire.[14] In addition to addressing issues related to the project's purpose and need, the order also addressed reasonable alternatives to the project, and the impacts of GHG and methane emissions, and cumulative impacts.[15]
7. EDF appealed the Commission's orders to the U.S. Court of Appeals for the D.C. Circuit,[16] claiming that the Commission's decision was arbitrary and capricious because the Commission inappropriately relied on the single precedent agreement to find need and because the Commission failed to sufficiently balance the project's benefits against the adverse effects.
8. On June 22, 2021, the D.C. Circuit issued a decision granting EDF's petition, vacating the Commission's Certificate and Rehearing Orders, and remanding the case to the Commission for further proceedings.[17] The court found that the Commission's grant of a certificate of public convenience and necessity was arbitrary and capricious because even though "the Commission was presented with strong arguments as to why the precedent agreement between Spire STL and Spire Missouri was insufficiently probative of market need and benefits of the proposed pipeline," the Commission relied upon a single precedent agreement with an affiliated shipper, Spire Missouri, to establish need and failed to weigh the project's benefits against its adverse effects.[18] Specifically, the court stated that:
nothing in the Certificate Policy Statement suggests that a precedent agreement is conclusive proof of need in a situation in which there is no new load demand, no Commission finding that a new pipeline would reduce costs, only a single precedent agreement in which the pipeline and shipper are corporate affiliates, the affiliate precedent agreement was entered into privately after no shipper subscribed during an open season, and the agreement is not for the full capacity of the pipeline.[19]
9. The court held that the Commission failed to engage with "plausible evidence of self-dealing" offered by EDF[20] and that "[t]he challenges raised by EDF and others were more than enough to require the Commission to 'look behind' the precedent agreement in determining whether there was market need."[21] The court also faulted the Commission for failing to meaningfully examine the purported benefits of the project (i.e., retiring of Spire Missouri's propane peaking facilities, access to natural gas supplies from the Marcellus region, and avoiding the New Madrid Fault) even though EDF and others challenged whether these benefits were likely to occur.[22]
10. On August 5, 2021, Spire filed a petition for panel rehearing or rehearing en banc, asserting that vacatur would cause service disruptions during the 2021-2022 winter heating season.[23] The court denied Spire's petition.[24] Thus, once the D.C. Circuit's mandate became effective, the Commission's orders and Spire's authorizations were no longer valid.[25]
11. On July 26, 2021, Spire filed an application requesting that the Commission issue a temporary certificate under NGA section 7(c)(1)(B).[26] Spire stated that without a temporary certificate Spire Missouri would be unable to transport gas via the Spire STL Pipeline during the 2021-2022 winter heating season and this could cause the curtailment of service to 175,000 of its 650,000 customers.
12. On September 14, 2021, to prevent an emergency from the immediate cessation of service by Spire, the Commission, sua sponte, issued a temporary certificate for 90 days while it evaluated Spire's temporary certificate application.27[] On October 14, 2021, Scott Turman and the Niskanen Center, jointly, and a group of 51 landowners filed requests for rehearing and Spire filed a request for clarification. The Niskanen Center questioned whether a section 7(c)(1)(B) temporary certificate includes eminent domain authority under section 7(h) and whether Commission Order Nos. 871-B and 871-C28[] would presumptively stay the proceeding pending requests for rehearing. Spire requested clarification as to whether it could continue to serve another existing customer, Spire Marketing, and if it could enter new contracts under the temporary authorization. The Commission, on November 18, 2021, issued an order granting both of Spire's requests for clarification and addressing the requests for rehearing.29[] The Commission found that whether eminent domain authority under section 7(h) applied to temporary certificates was an issue better resolved by the courts.30[] As for a stay under Order Nos. 871-B and 871-C, t h e C o mmis s io n conclud ed that its presumptive stay policy w as not applicable due to the emergency nature of the proceeding.31[]
13. On November 12, 2021, Spire filed a request for expedited reissuance of the certificates. In its request, Spire asks that the Commission reissue the Certificate of Public...
To continue reading
Request your trial