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Case number 23-1064 et al.

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New Jersey Conservation Foundation et al.

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Petitioners versus Federal Energy Regulatory Commission.

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Ms.

[00:00:10] Speaker 00:
Naismith for the petitioners, Mr. Schwartz for the intervener, Ms.

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Barry for the respondent, Ms.

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Whitmer for the intervener.

[00:00:34] Speaker 05:
Morning, Ms.

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Naismith.

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You can proceed when you're ready.

[00:00:37] Speaker 07:
Thank you, Your Honor.

[00:00:47] Speaker 07:
May it please the court, Maneen Naismith with Earthjustice on behalf of all the petitioners.

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The project at issue here is a massive expansion of the gas system.

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approved to primarily serve the alleged need of New Jersey distribution company customers, a need that the New Jersey Board of Public Utilities found does not exist.

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FERC's reasons for adopting essentially the contrary conclusion rests on its over-reliance on precedent agreements and its wholesale acceptance of the finding of a study that FERC itself admits contains methodological deficiencies.

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FERC's handling of the evidence here was arbitrary and capricious, and its claims that the project is needed and provides benefits are speculative, not supported by the historical practices of the distribution companies, and not supported by the record before FERC.

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The project further would cause substantial harms that FERC has not accounted for, including the potential to pass huge costs of year-round capacity onto captive rate payers.

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and producing more than 16 million tons per year of greenhouse gas emissions, which on day one would be almost 12% of New Jersey's entire state inventory, and by 2050 would be almost 50% of that inventory.

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Fail-Firk to assess the significance of or weigh those harms, including how the project will prevent New Jersey from meeting statutory mandates to reduce emissions.

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The sheer size of the harms here

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should have meant that every part of FERC's decision got more scrutiny, and yet FERC did the opposite.

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It inflated and manufactured the project's needs and benefits, and it minimized and ignored its harms in violation of both the Natural Gas Act and NEPA.

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What do you make of the several decisions of this court that have held that precedent agreement subscribing to 100 percent of the

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pipeline's capacity may be sufficient to show market need.

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And here we have more.

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We have statements by suppliers.

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We have these studies.

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Yes, Your Honor.

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So may be sufficient to show market need, and especially pointing to this court's decision in EDF v. FERC, that the commission has to look at the totality of the record in front of it and consider all relevant factors, which is

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what the court here in the EDF decision emphasized as well as what is in FERC's own policy statements.

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And here, Your Honor, yes, there are studies on the one hand by Transco, which is the applicant and has a vested interest in getting its project approved, but then on the other, you have a finding by the board, not just a study, but a finding by the Board of Public Utilities of New Jersey that was done after a full

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um, public proceeding in which these shipping companies had an opportunity to participate.

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The board took all of the evidence in front of it and commissioned an independent study and came to the opposite conclusion that there was not only is there not all of this capacity needed, none of this capacity is needed.

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So I guess I'm, I want to further explore how that seems to be in tension with

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the notion that precedent agreements can show market need.

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I mean, I understand and we have said in prior cases that a showing of market need is important to ensure that current rate payers don't have to bear the burden.

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And so we've treated, we've looked for the market need being met by new customers.

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But then if the precedent agreements are by existing LDCs, that doesn't seem to show new demand.

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It's basically taking current captive customers and assuming that they will be paying the price.

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So I'm really asking you to help me understand

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our court's own precedent, some of which I wrote.

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But just sort of how do you deal with that precedent, which is binding on this court?

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Yes, Your Honor.

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Well, I would, again, point to the fact that there has been, I think, some shift in that precedent in the EDF v. FERC context, where the court recognized that the reason that we typically, and this court has typically, looked at precedent agreements as evidence of market need is because we assumed that that's actually what these agreements showed.

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In the EDF case, however, the court looked at the totality of the circumstances and found, wait a minute, there might be something else going on here.

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These agreements may not, in fact, show us what we have assumed them to be evidence of in the past.

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Is that the Spire case?

[00:05:40] Speaker 07:
That's the Spire case, yes, Your Honor.

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Right.

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So is there any other case where we've discounted precedent agreements, because it sure seems to me that

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Although I appreciate the point, that case is very distinguishable.

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There was an open season with no takers at all, and then they came up magically with a precedent agreement to an affiliated company.

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Here, 82% of these precedent agreements are unaffiliated companies, so it seems like the logic, at least what we explained there, wouldn't apply here.

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So, Your Honor, there are some differences in facts, but the logic still does apply, because the concern the court had was, are captive rate payers being made to pay for capacity that they don't actually need?

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And while the reason for that in the Spire case was the nature of the affiliated relationship between the pipeline company and the shipper, here there is that possibility just as much because you have the potential for these shippers, these LTCs, to not actually have to pay for the capacity they're contracting for.

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And where you have a study by the board, which is the statutory

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or the entity that is statutorily responsible for ensuring adequacy of supply in New Jersey saying, these captive rate payers don't need this gas.

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The commission has to stop and say, are these precedent agreements truly evidence of a real need or is there a potential

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for the cost of that capacity to get passed on to captive rate payers.

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So wouldn't that argument mean, and maybe this is similar to Judge Pillard's question, that precedent agreements never mean anything?

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No, Your Honor.

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In this context, it's always going to be a shipper with some other customer at the end of the line.

[00:07:17] Speaker 07:
Not necessarily, Your Honor.

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There are different kinds of shippers.

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There are some shippers, for example Williams in this case, that are not LDCs.

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They are merchant companies.

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And so those companies are, in fact, incurring the risk of

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buying a bunch of capacity and not having any takers.

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The nature of the relationship here is different because you do have those captive rate payers at the end of the line that might end up, and very likely could end up, footing the bill for capacity that the state is saying isn't necessary.

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And the nature of that is that the LDCs, for whatever capacity they don't need and that isn't used by those rate payers, they can turn around and sell it.

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and then profit from that.

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And the profit goes, in large part, to the shareholders.

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It doesn't necessarily go back to make those ratepayers whole for having paid for capacity that's unnecessary.

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Although, as I take it, the Transcos and FERC say, well, there's market logic.

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Why would anybody invest in something that's going to create an oversupply?

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Williams is a check on that, because it can't

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pass those costs along to existing captive rate payers.

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And so why would it see this as a good investment if it didn't think that over the life of its contract that there is going to be a need supporting high prices for the shipping?

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Well, and that, Your Honor, I think, conflates what market you're talking about and who is picking up the tab for that capacity.

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There's a difference between is there a need by these captive rate payers, which is what

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FERC is claiming exists here, but what New Jersey has said does not exist.

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And then on the other hand, are there some other set of actors, including intermittent customers out in the natural gas market, that would be capable and willing of buying this capacity?

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So there might be a broader market demand or possibility to sell this gas.

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But that's a different question than who's picking up the tab and who is being, not just picking up the tab, forced to pick up the tab.

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And because FERC's responsibilities very clearly include protecting rate payers, that was part of the reason why.

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But do you have specific evidence this is going to result in higher prices for rate payers?

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Because I might be misunderstanding.

[00:09:37] Speaker 01:
This is why I'm asking.

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But I thought your reply brief actually says,

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that what you think these LDCs are going to do with the excess supply is try to offload them at below market prices, which doesn't seem like a big problem for rate payers.

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It sounds like a good thing.

[00:09:50] Speaker 07:
But the rate payers are paying for the capacity.

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So they're already paying for the price of the project itself, the almost billion dollars that it takes to construct this project.

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They're paying for the capacity.

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That gets baked into their rates that they paid on the regular.

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Then there's the question of, well, if the LDCs don't need all of that capacity, can they turn around and resell that out into the market?

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And because they have someone paying for the expense of the project, they can offer it at lower rates for the reason that their rate payers are the one paying for the cost of that capacity, and the LDC itself doesn't have to incur that.

[00:10:29] Speaker 05:
I have two follow-up questions on that.

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Presumably, if your criticism is valid, then this problem would be endemic.

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Are there any cases that have dealt with it?

[00:10:41] Speaker 07:
Your Honor, this is really the first time that this robust record has been presented to FERC and that this clear finding has been presented to FERC by a state that undertook a full study of its own to determine, does this area need more gas?

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So there is no other precedent to point to, unfortunately.

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This is sort of a first of its kind moment where this level of conflicting evidence was presented to FERC.

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And FERC decided to essentially ignore it and side with Transco's version of events and authorize the entirety of the capacity for this project.

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I want you to be able to finish your point.

[00:11:18] Speaker 07:
No, I was just going to say, I'm seeing that I'm out of time, and there was a whole other chunk that I was going to get to.

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We in this court have a very rigorous timekeeping practice, which is that as long as we have questions, we deem your time to be remaining.

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So the second question, as I mentioned following up on that, is that FERC mentions that sometimes retail regulators will require the sharing of revenues from off-system

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resales of capacity with captive customers who paid for the underlying assets.

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Is that the case in New Jersey, and if not in any other states that will be receiving this?

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And if not, is that a way that the state could respond?

[00:12:03] Speaker 07:
I believe, Your Honor, that what Ferg raised was more a function of whether or not the state could make a finding of imprudence and prevent the cost of the project from being passed along to the ratepayers.

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I don't know, to be honest, Your Honor, the direct response to your question, and that might be something that rate council might be able to help you out on.

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But with respect to the imprudence finding, that's a very rare occurrence that states will make that finding in no small part because it is a deeply imperfect remedy.

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It puts the LDC in a not fabulous financial position, which ultimately is something that affects rate payers' rates for a whole host of reasons.

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The other reason why that would not actually be, and also FERC doesn't know that either of those things would in fact happen, it's speculating, and so it needed to at least consider, and it refused to do that here, the possibility that the cost of this project will get passed to rate payers who are captive, and to seriously consider whether that's wise in the face of New Jersey's findings.

[00:13:11] Speaker 03:
I know you have a whole other.

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No, please go.

[00:13:13] Speaker 03:
I've got other questions.

[00:13:14] Speaker 03:
OK.

[00:13:15] Speaker 03:
I'll jump in here now.

[00:13:17] Speaker 03:
One of the biggest concerns that you all seem to present is that there was never an evidentiary hearing.

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So I would like to know what you feel that that would reveal.

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I mean, it is a billion dollar or more project.

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And so what do you feel like that would reveal?

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Because this whole thing was dealt with essentially on the paper.

[00:13:35] Speaker 07:
Yes, Your Honor.

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There's a long list of things that we would want to investigate in an evidentiary hearing.

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Among other points, it would be that one of the crux discrepancies in this case is the belief and the fear that off-stream peaking contracts that LDCs have relied upon for years continue to rely upon to meet peak needs.

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So rather than contract for as these precedent agreements would have it happen,

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All of the gas that you would need in January, 365 days out of the year, what LDCs have historically done is to enter into shorter term, one to two year contracts to meet peak seasonal needs.

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Transco's study assumes that these companies can no longer do that.

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And FERC essentially says, well, that might happen.

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So we're going to go with transco.

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Whereas the New Jersey finding and the other pieces of evidence in the record very clearly said that's been happening for years.

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There's no reason to suspect that that's suddenly going to disappear.

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So we're counting on the availability of that.

[00:14:44] Speaker 01:
This issue, one difficulty.

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We have is it's not an issue for didn't address right.

[00:14:50] Speaker 01:
They do say that the key difference is these assumptions about non-firm supply and these are short term contracts and our job at FERC is to plan against true worst case scenarios and we can't say with any confidence that these contracts are going to be available 10 years from now.

[00:15:09] Speaker 01:
So what we're going to do is credit the study that takes the most conservative approach.

[00:15:16] Speaker 01:
And I certainly think the other approach is probably reasonable too, but I'm not sure how we can say FERC's approach is unreasonable.

[00:15:26] Speaker 07:
You can say that FERC's approach is unreasonable, Your Honor, and this will also respond to Judge Child's question about what we want to investigate, because FERC didn't substantiate that that risk exists.

[00:15:36] Speaker 07:
They didn't explain why they think.

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it's better to be more conservative or what actual fear there is that these contracts will suddenly go from providing hundreds of thousands of decatherms to no longer being available at all.

[00:15:49] Speaker 05:
Well, they did say that the demand elsewhere might change, might increase.

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They did point to the fact that there's a legal difference between firm contracts and the availability on a

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I don't know if they call them spot markets here, the way they do in electricity, but the availability in a peaking situation, presumably in that situation, everybody is gonna want the same capacity.

[00:16:22] Speaker 05:
So they gave some, what I would think of as sort of basic economic logic, and then New Jersey turns around and says, 20 years of experience, and so I guess the question is, we defer to the expert agency, and short of making some kind of

[00:16:40] Speaker 05:
de novo determination ourselves, which is beyond our scope of our review, how do we manage that?

[00:16:49] Speaker 07:
You manage it, Your Honor, and just to clarify, this is not unlike a spot market.

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This is not a day-to-day thing.

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So this is not a question of availability on the absolute coldest day out of the year, and then LDCs run short.

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LDCs are legally required to have contracts in place to meet design day.

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So the kinds of things we're talking about here are one- to two-year contracts.

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that are entered into, and once you enter into those contracts, you have as much right to that gas as if you were under a 365 day a year contract.

[00:17:21] Speaker 07:
And so the reason that this is not a de novo review, but is simply a looking at the sufficiency of the record question, is again, FERC never substantiated or explained, other than to say, well, maybe it will be cold.

[00:17:35] Speaker 07:
or maybe this could happen, they never actually explain why they think it's going to happen, especially in light of the evidence that was presented to them by the state of New Jersey that this gas is there, that it's unlikely to go anywhere.

[00:17:50] Speaker 07:
And in fact, in terms of what's in the record as well, the downstream states that the gas might flow to, for example, New York, all have aggressive climate reduction requirements.

[00:18:00] Speaker 07:
So the likelihood that the gas that is flowing through

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new jersey and into other downstream markets would suddenly become completely available unavailable for purposes of these one to two-year seasonal contracts is just not supported by the record and it's not good enough for for to say well

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This might happen.

[00:18:18] Speaker 07:
So to go back to your question, Judge Childs, about what we would want to see in an evidentiary proceeding, it would be a building out of the record on that particular point.

[00:18:27] Speaker 07:
Where does this risk come from?

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How big is this risk?

[00:18:31] Speaker 03:
And I would additionally indicate the issues with respect to climate change.

[00:18:35] Speaker 03:
Yes.

[00:18:36] Speaker 03:
Who are we to look to in that regard?

[00:18:39] Speaker 03:
You've got the Council on Environmental Quality.

[00:18:41] Speaker 03:
They're charged with administering NEPA.

[00:18:43] Speaker 03:
But then you also have EPA charged with controlling air pollution.

[00:18:47] Speaker 03:
And there does not seem to be FERC really evaluating the climate change, although there has been precedent allowing them to at least glean in on that.

[00:18:57] Speaker 03:
And so I would ask you that.

[00:18:59] Speaker 03:
But then also we have cases like Delaware Riverkeeper where the court has deferred to FERC's

[00:19:05] Speaker 03:
discretionary decision making with respect to downstream GHG emissions.

[00:19:11] Speaker 07:
To transition over to the question of how FERC assessed climate, and the problem really is that FERC failed to grapple with the significance of the project's climate emissions.

[00:19:25] Speaker 07:
NEPA requires that the agencies conducting an EIS explain to the public and disclose to its own decision makers whether and to what extent the harms that they are quantifying matter.

[00:19:42] Speaker 07:
What FERC did here is a little like having them declare that there are gonna be hundreds of threatened animals killed as a result of a project.

[00:19:50] Speaker 07:
Do the math and then stop.

[00:19:53] Speaker 07:
And not explain, does that matter?

[00:19:56] Speaker 07:
What is the effect of that harm that this project is causing?

[00:20:03] Speaker 05:
Just to interject, and I don't want you to lose your point.

[00:20:09] Speaker 05:
So is it your understanding of the record that the commission effectively set the greenhouse gas, made all the calculations, and the

[00:20:24] Speaker 05:
significance, well not significance, but the social cost determination and then set it to one side and in fact didn't include it in its balancing of

[00:20:37] Speaker 05:
Yes, Your Honor.

[00:20:39] Speaker 07:
And so it very much, that failure to make a significance finding very much affects the determination under the Natural Gas Act.

[00:20:47] Speaker 05:
Is significance, is disgust a great deal in the case?

[00:20:52] Speaker 05:
But forgive me.

[00:20:53] Speaker 05:
I know significance is a trigger for whether an environmental assessment or an EIS is done, but here an EIS was done.

[00:21:03] Speaker 05:
Is significance also the threshold for whether something

[00:21:07] Speaker 05:
has to be given any consideration at all?

[00:21:11] Speaker 05:
I mean, what is sort of the operative, why does it matter whether the amounts that were calculated were labeled significant?

[00:21:20] Speaker 05:
Because if they're in the record, is it not an obligation of the agency that's taking the subject action to consider them?

[00:21:31] Speaker 07:
I mean, I think, Your Honor, first of all, they didn't consider them, and that's part of it.

[00:21:34] Speaker 05:
I heard you on that.

[00:21:35] Speaker 05:
Yes.

[00:21:35] Speaker 05:
But the follow-up question is, what role does the significance label in your challenge?

[00:21:44] Speaker 07:
So the role of the significance label, Your Honor, is it's not just a label.

[00:21:48] Speaker 07:
It is, does the agency actually discuss how bad

[00:21:53] Speaker 07:
What does this harm mean?

[00:21:56] Speaker 07:
What does this number mean?

[00:21:58] Speaker 07:
And that has a really important purpose under NEPA as well as we've already mentioned under the Natural Gas Act, which is that it is supposed to, if you find an effect to be significant, the agency is supposed to compare alternatives according to that and compare the relative effects of alternatives according to that harm.

[00:22:22] Speaker 07:
as well as consider mitigation measures, because the idea is if something is significant, can you mitigate it down below a level of significance and then ultimately have what is known as a mitigated, a finding of, that you have no significant impacts because of those mitigation measures?

[00:22:39] Speaker 07:
By putting a pin in this discussion, FERC

[00:22:43] Speaker 05:
did none of those things.

[00:22:45] Speaker 05:
So that's within the context of what NEPA requires.

[00:22:50] Speaker 05:
There is also under the, I mean, the ultimate determination that the commission made that you're challenging is the certificate order and under the Natural Gas Act itself,

[00:23:02] Speaker 05:
there's a requirement of balancing.

[00:23:04] Speaker 05:
And I guess my question is, even if for the purposes of NEPA, for the purposes of alternatives, of mitigation, significance is a trigger, there is nonetheless a set of numerical valuations in the record.

[00:23:20] Speaker 05:
And what is your position on whether under the Natural Gas Act, significance or no, the commission has an obligation to include

[00:23:29] Speaker 05:
in its public interest weighing the identified and estimated greenhouse gas and other effects?

[00:23:38] Speaker 07:
It absolutely does, Your Honor, and that's exactly why FERC's approach here is a problem, because whatever numbers it came up with in the FEIS, it did so and labeled them itself for informational purposes only.

[00:23:52] Speaker 07:
And so those numbers never made it into

[00:23:56] Speaker 07:
FERC's balancing of harms versus benefits in its determination under the Natural Gas Act.

[00:24:01] Speaker 07:
The orders say nothing about, well, wait, what does this mean for these emissions to constitute 50% of New Jersey's emissions by 2050?

[00:24:11] Speaker 07:
What does this mean for a state that is trying to aggressively reduce, under its own law, greenhouse gas emissions?

[00:24:18] Speaker 07:
There's none of that.

[00:24:20] Speaker 07:
And I would say, too, the failure of

[00:24:23] Speaker 07:
the discussion under NEPA of comparing alternatives based on their climate effects as well as contemplating mitigation measures to address climate change.

[00:24:35] Speaker 07:
NEPA is an informational statute and it's supposed to inform the substantive decision.

[00:24:39] Speaker 07:
When there's no discussion of those things in the NEPA document, then that inevitably renders the substantive decision under the Natural Gas Act incomplete and defective.

[00:24:52] Speaker 05:
Although I guess I'm still a little bit confused when you say there's no substantive discussion.

[00:24:58] Speaker 05:
There's actually quite a bit of substantive discussion.

[00:25:01] Speaker 05:
But when you say that for informational purposes only, I think there may be two understandings of what informational purposes are.

[00:25:08] Speaker 05:
I mean, NEPA is an information forcing statute with the assumption that there's a wide range of ways that that information can bear on a decision.

[00:25:21] Speaker 05:
And in a statute like this one, which has a very open-ended requirement of balancing, it seems like information is all that NEPA needs to ensure, and then the agency has to act on that.

[00:25:34] Speaker 05:
So the informational purposes only seems like a chameleon-like phrase saying, we can treat it as mere information.

[00:25:42] Speaker 05:
We don't actually need to include it in our balancing.

[00:25:47] Speaker 05:
And that's your understanding of what they have done?

[00:25:49] Speaker 05:
Yes, Your Honor.

[00:25:51] Speaker 07:
that they did not factor climate.

[00:25:56] Speaker 07:
To label it information only meant that they did the math and did nothing more with that math for purposes of understanding how the harms of this project balance out compared to the benefits.

[00:26:08] Speaker 01:
Well, there's certainly a long, oh, sorry.

[00:26:11] Speaker 03:
Go ahead.

[00:26:12] Speaker 03:
Just to follow up on that, even if we found a market need, you're still saying that the harm outweighs any benefit and that we need to get to that step too.

[00:26:20] Speaker 07:
Yes, Your Honor, and we would say that FERC hasn't established that the benefits outweigh the harms because they ignored such a huge harm here in the form of ignoring the project's climate change impacts.

[00:26:35] Speaker 03:
But your ultimate remedy you're requesting is grant the petition, vacate the orders, and then remand to do what?

[00:26:42] Speaker 07:
Remand to consider and balance the climate harms in

[00:26:48] Speaker 07:
the ultimate determination as to whether or not this project is in fact required by the public convenience necessity.

[00:26:53] Speaker 07:
So redo the balancing.

[00:26:55] Speaker 03:
Okay, but this was done on paper.

[00:26:58] Speaker 03:
So is it further that an evidentiary hearing would be required to get to that appropriate balancing because

[00:27:07] Speaker 03:
Personally, if you remain something, even with that instruction, you can just better write it up to get to your result.

[00:27:13] Speaker 07:
Yes, Your Honor.

[00:27:14] Speaker 07:
The problem here is that FERC didn't really engage in that balancing act at all.

[00:27:18] Speaker 07:
So it's difficult to think about how from this part of the errors that FERC committed would be subject to an evidentiary hearing to the extent that FERC felt like it needed more information in order to accomplish that task.

[00:27:32] Speaker 03:
So you're not asking for an evidentiary hearing, just the rebalancing.

[00:27:35] Speaker 07:
For the purposes of the climate argument, yes, your honor, for the purposes of the need argument and the assessment of benefits as well, which does feed into the balancing, an evidentiary hearing is certainly something that would be welcome to be able to really dig into some of the problems with the record and questions that FERC just never asked.

[00:27:55] Speaker 07:
And I've listed a few, but we also go into some more detail in our brief about the assumption made.

[00:28:02] Speaker 07:
Commissioner Clements notes this, that there was an assumption made about the fact that one of the LDCs didn't have any shorter term contracts on its books, but FERC never asked why.

[00:28:11] Speaker 07:
It just assumed that the reason was because those contracts were unavailable to probe elements of the record along that line.

[00:28:19] Speaker 07:
An evidentiary hearing would certainly be a useful tool in those areas.

[00:28:26] Speaker 01:
Yes, so a few questions.

[00:28:27] Speaker 01:
The first one is just a technical one.

[00:28:29] Speaker 01:
I think I understood you earlier to be acknowledging just for purposes of NEPA that where you have an emission that has insignificant impacts.

[00:28:38] Speaker 01:
there's no duty triggered to consider mitigation possibilities, right?

[00:28:43] Speaker 01:
So that the significance determination is the trigger for that?

[00:28:46] Speaker 01:
Yes, Your Honor.

[00:28:47] Speaker 01:
Okay.

[00:28:48] Speaker 01:
Then, so this is a little bit difficult to do, but the certificate order does have

[00:28:58] Speaker 01:
several paragraphs, 69 to 73, that set out the greenhouse gas information, right?

[00:29:03] Speaker 01:
Then it declines to make a significance determination.

[00:29:06] Speaker 01:
And then in the conclusion on J584, it refers back to all of the environmental information that we've set forth, essentially, and says we find the need outweighs the impact.

[00:29:21] Speaker 01:
I just expect FERC will get up and say, that's how you know we considered all of the greenhouse gas emissions and nonetheless found it, this project to be justified.

[00:29:33] Speaker 01:
And I just, what's your response to that?

[00:29:36] Speaker 01:
We needed more of a paragraph that said, even though it's 11.8% of New Jersey, that's warranted for X, Y, Z reasons.

[00:29:45] Speaker 07:
Yes, Your Honor, to the extent that FERC is effectively, by failing to do a significance determination, treating the emissions as if they don't exist.

[00:29:54] Speaker 07:
That is not an appropriate approach under NEPA, especially when you're dealing with a project that has emissions of this magnitude, to the extent that they are claiming that they weighed those harms.

[00:30:07] Speaker 07:
Again, given the extent, if we were talking about a project, and they've done this before, they've had projects with very small levels of greenhouse gas emissions, and they've said, well, we may not have a threshold, but we know that this is insignificant.

[00:30:21] Speaker 07:
So they've done that, they've shown themselves capable of doing that,

[00:30:24] Speaker 07:
This project is sort of the other side of that extreme of having millions of tons per year.

[00:30:31] Speaker 07:
It defies logic a little bit to think that they could just not address that at all in a more detailed way to discuss, again, how is that harm not sufficient to really outweigh the other benefits that they've identified?

[00:30:47] Speaker 01:
And I just had one last, oh.

[00:30:49] Speaker 05:
Or at least not sufficient enough

[00:30:51] Speaker 05:
wherever the line is drawn, I mean, I'm trying to understand if this is your argument, wherever the line may be drawn by the Council on Environmental Quality or some competent policy maker on this question, you're saying, well, where this is not a close case, the commission should have assumed, well, this is, whatever significance is, this is significant, therefore, let's look at mitigation measures, and therefore, let's weigh, and I'm not sure significance

[00:31:21] Speaker 05:
matters in terms of the weighing under the Natural Gas Act, but we'll hear from other counsel on that.

[00:31:27] Speaker 05:
But is that, in effect, your position?

[00:31:30] Speaker 07:
Yes.

[00:31:30] Speaker 07:
I mean, certainly, Your Honor, to admit that these, again, if you want to use the significance label under the Natural Gas Act or not, but these are a big deal.

[00:31:38] Speaker 07:
These are a lot of harms.

[00:31:40] Speaker 07:
Can we mitigate them?

[00:31:42] Speaker 07:
Let's consider mitigation measures, and the only line in FERC's decision documents here is, well, Transco didn't propose any, so that's it.

[00:31:51] Speaker 07:
But let's actually look at can we get these numbers lower?

[00:31:55] Speaker 07:
And if we can't... Whose burden is that?

[00:31:58] Speaker 07:
The burden is on the commission, Your Honor, to ensure that it complies with both NEPA and the Natural Gas Act that contemplates imposing conditions in order to... But in a case like this, is it not the petitioner's burden to say there are mitigation measures that were overlooked?

[00:32:12] Speaker 07:
I think, Your Honor, it's certainly the applicant's burden to present them.

[00:32:19] Speaker 07:
But in the absence of those being presented, it is FERC's burden to reject a project if it doesn't have sufficient evidence to make a determination, again, that complies with a statutory standard that says unless this project is required by the public convenience and necessity, you can't approve.

[00:32:38] Speaker 07:
So if FERC is sitting there with an incomplete record and has these huge harms in front of it in the form of these greenhouse gas emissions and no one has proposed any mitigation measures,

[00:32:48] Speaker 07:
then FERC can either say, well, we don't have the basis in front of us to find affirmatively that this project is required, or as the FERC does in many instances, while these dockets are being considered, go back to the applicant and say, we'd like some more information, how about some mitigation measures?

[00:33:08] Speaker 01:
One last very specific question we were discussing earlier.

[00:33:11] Speaker 01:
I appreciate the very good point that one thing we might do is on the trans go study and this debate about whether to include non-firm supply that they haven't.

[00:33:23] Speaker 01:
supported this judgment that there's a risk these contracts won't be available in the future.

[00:33:29] Speaker 01:
I think the one specific piece of evidence they pointed to was that one of the LDC's New Jersey natural gas predicts that these resources will become unavailable in the next few years.

[00:33:41] Speaker 01:
Is that a misunderstanding or that's what it says on in paragraph 65 of the hearing order.

[00:33:47] Speaker 01:
So is that incorrect?

[00:33:48] Speaker 07:
The predictive nature of what the record actually shows is the only thing that I would quibble with your honor there on that.

[00:33:55] Speaker 07:
It's not that New Jersey, it's not that there was an affirmative statement that says we can't get these contracts anymore because they are unavailable.

[00:34:04] Speaker 07:
The piece of evidence that actually exists in the record is just they're not going to.

[00:34:08] Speaker 07:
They're not signing up for that capacity.

[00:34:11] Speaker 07:
in the newer term in 2020, after 2022.

[00:34:16] Speaker 07:
There isn't, so to assume that that means the reason for that is, again, and this was Commissioner Clement's point in her concurrence, to assume that that's because they can't, as opposed to they are gonna figure out another way to- The point would be if they need it in the future, they can do it, and this isn't inconsistent with that.

[00:34:34] Speaker 07:
Correct.

[00:34:34] Speaker 01:
Okay, thank you.

[00:34:35] Speaker 07:
Correct, Your Honor.

[00:34:41] Speaker 07:
I am well over time.

[00:34:42] Speaker 07:
I appreciate it, Your Honor.

[00:34:44] Speaker 05:
We will give you some rebuttal time.

[00:34:46] Speaker 05:
Thank you.

[00:35:16] Speaker 05:
Good morning, Mr. Schwartz.

[00:35:16] Speaker 05:
You may proceed when you're ready.

[00:35:18] Speaker 02:
Good morning.

[00:35:18] Speaker 02:
Thank you.

[00:35:19] Speaker 02:
May it please the court, Jeffrey Schwartz for the New Jersey Division of Raid Council.

[00:35:25] Speaker 02:
Picking up with one of Judge Garcia's questions, yes, FERC at the end of its order states that this project is environmentally acceptable, but stating a conclusion is not enough for judicial review or the APA

[00:35:42] Speaker 02:
The agency needs to explain its reasons.

[00:35:45] Speaker 02:
It fundamentally did not do that.

[00:35:47] Speaker 02:
Judge Pollard, you're correct.

[00:35:49] Speaker 02:
The Natural Gas Act requires FERC to make a public interest determination.

[00:35:54] Speaker 02:
That means it must decide whether the project's harms or benefits are more substantial and give reasons why.

[00:36:01] Speaker 02:
Here, it did not do that.

[00:36:04] Speaker 05:
FERC here approved- Are you arguing?

[00:36:06] Speaker 05:
There are some range of quantification of the costs.

[00:36:12] Speaker 05:
for example, of the greenhouse gases.

[00:36:15] Speaker 05:
There's no quantification on the beneficial effects, the cost savings to rate payers.

[00:36:24] Speaker 05:
Have you argued that that's inadequate because it's price information and there should at least be some effort to estimate the extent to which this will save money to rate payers?

[00:36:38] Speaker 02:
Absolutely, that's one component, and you were correct.

[00:36:41] Speaker 02:
We have argued that FERC makes vague references to reliability, supply diversity, and cost benefits, which are basically the same kind of Ipsy-Dixon assertions that this court found insufficient in the Spire case Environmental Defense Fund v. FERC.

[00:36:57] Speaker 02:
But moreover, if you go and look in the record, what you'll find is that those benefits are quite meager.

[00:37:03] Speaker 02:
According to Transco itself, the project will relieve pipeline constraints

[00:37:06] Speaker 02:
on just four days a year, that's a JA-166, and will reduce annual prices by less than one half of one percent, that's JA-168, and Transco emphasizes that even those estimates are highly uncertain, JA-175.

[00:37:22] Speaker 03:
Are there other processes for these increased costs to rate payers in the sense of a separate proceeding or an after-the-fact prudency review?

[00:37:33] Speaker 02:
So, New Jersey can partially

[00:37:37] Speaker 02:
deal with some of the rate payer harm.

[00:37:41] Speaker 02:
FERC clarified that New Jersey can conduct an after the fact prudence investigation.

[00:37:46] Speaker 02:
That only fixes part of the problem.

[00:37:51] Speaker 02:
New Jersey can disallow the pass-through to repairs of the pipeline construction costs, but doing that presumably means that the distributor companies are going to eat those costs.

[00:38:04] Speaker 02:
That makes them riskier investments in the eyes of Wall Street.

[00:38:08] Speaker 02:
It increases their financing costs, the cost of debt.

[00:38:11] Speaker 02:
That increased cost gets applied to the utility's whole rate base.

[00:38:15] Speaker 02:
And it ends up increasing rate payer costs in other ways.

[00:38:18] Speaker 02:
So it's a very imperfect solution from the rate payer and public regulator standpoint.

[00:38:27] Speaker 02:
And of course, it does nothing at all to address the project's climate change impacts and its hindrance of New Jersey state policy to reduce emissions.

[00:38:39] Speaker 05:
I found the argumentation and the record a little bit complex on interruptible demand.

[00:38:48] Speaker 05:
Does the certificate rely on interruptible demand?

[00:38:56] Speaker 05:
And if not, is it problematic that the Transco study does?

[00:39:01] Speaker 05:
And is it problematic that the commission in discrediting the New Jersey Council study points to its failure to consider potential interruptible demand by electricity generators that would be relying on natural gas?

[00:39:23] Speaker 02:
FERC treated the possibility of electric generator demand as a bit of a magic wand or a get out of jail free card that it could wave over the question of need and fill the gaps in the reliability analysis.

[00:39:40] Speaker 02:
But remember, this project was justified primarily on the basis of a reliability need of the New Jersey distributor companies.

[00:39:50] Speaker 02:
Without their 56% subscription, this project is only 44% subscribed, and if you take out Transco's affiliate, that percentage drops to 26%.

[00:40:01] Speaker 02:
If you take out the Maryland LDC, which counts for 5%,

[00:40:09] Speaker 02:
And of course, Maryland joined the state amicus brief urging this court to vacate FERC's order.

[00:40:14] Speaker 02:
You get down to the order of like 20%.

[00:40:17] Speaker 02:
Trying to justify this billion dollar project that will massively spike greenhouse gas emissions contrary to state policy on the basis of a 20% subscription, that would require a much different order than the one FERC wrote.

[00:40:35] Speaker 02:
I'd like to amplify a bit my colleague's point that FERC here was not tasked with choosing between two comparable consultant studies.

[00:40:44] Speaker 02:
One was commissioned by the pipeline to support just a result and the other was commissioned and adopted by the regulator that is charged with protecting the public and ensuring the reliability of the local gas system.

[00:40:57] Speaker 02:
On questions of gas distributor needs and resources the board

[00:41:02] Speaker 02:
is the expert agency.

[00:41:04] Speaker 02:
Every year it receives and reviews filings by the New Jersey students.

[00:41:08] Speaker 01:
Council, FERC is also an expert agency.

[00:41:10] Speaker 01:
So what specific point in the New Jersey study are you saying that FERC did not engage with?

[00:41:20] Speaker 02:
FERC overestimated demand, FERC acknowledged that the Transco study overestimated demand by accepting demand forecasts that did not fully account for legally mandated gas use reductions that were slated to begin in 2025.

[00:41:38] Speaker 02:
If you look in the record at JA59 and JA298, what you'll see is that Transco extrapolated historic usage patterns and short-term forecasts.

[00:41:50] Speaker 02:
through 2025, but that would not have captured required reductions that were slated to begin in 2025, 2026.

[00:41:59] Speaker 02:
So the demand was overstated.

[00:42:01] Speaker 02:
And on the supply side, you were asking earlier about this question of non-firm supply, short-term contracts.

[00:42:11] Speaker 02:
FERC itself acknowledges at page 32 of its brief, and the FERC re-hearing order at note 79,

[00:42:18] Speaker 02:
acknowledges that distributors typically structure portfolios with both long-term and short-term supplies.

[00:42:27] Speaker 02:
And it's correct that New Jersey Natural Gas provided a schedule that showed reducing short-term contracts in the future.

[00:42:37] Speaker 02:
But we have no idea why.

[00:42:40] Speaker 02:
One possibility might be that they thought those contracts would become unavailable.

[00:42:44] Speaker 02:
They didn't say so.

[00:42:46] Speaker 02:
FERC didn't make that finding.

[00:42:48] Speaker 02:
Other possibilities are they didn't think that they would need that short-term contract, those short-term contracts in the future.

[00:42:54] Speaker 01:
I think FERC's fundamental point, and I appreciate that there's an argument that this risk is not

[00:43:00] Speaker 01:
adequately substantiated but the fundamental point that they make is our job is to ensure reliability and so what we can do the fundamental difference is risk tolerance and you are more tolerant of risk and we are going to eliminate these non-firm supply contracts that are subject to competition and we're doing long-term planning

[00:43:22] Speaker 01:
and we as the agency responsible can take a more conservative approach.

[00:43:27] Speaker 01:
Why can we say that's unreasonable?

[00:43:29] Speaker 02:
I would dispute very strongly that FERC is more responsible or less risk tolerant than the New Jersey board, which is the regulator of these local gas companies charged with ensuring reliability.

[00:43:44] Speaker 02:
If retail customers can't get gas,

[00:43:47] Speaker 02:
They're going to call the board, they're not going to call FERC.

[00:43:50] Speaker 01:
But I think the bottom line of your argument is that we should credit the New Jersey board over FERC.

[00:43:56] Speaker 01:
That's not really a call we're able to make.

[00:44:00] Speaker 02:
That's not quite what I'm saying, Your Honor.

[00:44:03] Speaker 02:
I think the fact that FERC was dealing with

[00:44:08] Speaker 02:
the result of a two-year state investigation, commissioning an independent study, holding a technical conference, receiving written reports on the draft study, including by the distributor companies, and then issuing a decision that no one appealed.

[00:44:25] Speaker 02:
I think that imposed on FERC an obligation to dig into the record more deeply than it did.

[00:44:32] Speaker 02:
And I would add, looping back to the climate change and harm issues,

[00:44:38] Speaker 02:
that the magnitude of those harms also imposed on FERC a greater duty to look deeper.

[00:44:44] Speaker 02:
FERC's own policy statement says that the greater the harm and the more interests adversely affected, the greater the evidence of need and benefit that will be required.

[00:44:56] Speaker 02:
And sure, if it were cost free,

[00:44:59] Speaker 02:
More supply, more pipeline capacity, more resources are always better.

[00:45:03] Speaker 02:
They're always going to result in some incremental improvement to a liability.

[00:45:08] Speaker 02:
But FERC's job is to weigh how much of an improvement it's going to make against its costs.

[00:45:15] Speaker 02:
FERC fundamentally failed to do that here and its decision should be vacated.

[00:45:19] Speaker 03:
Why isn't there a Clean Air Act argument raised just with respect to the air quality standards?

[00:45:27] Speaker 02:
I do not know.

[00:45:29] Speaker 02:
The EPA is the one that's going to enforce that.

[00:45:35] Speaker 02:
FERC isn't an environmental enforcement agency, but it is obligated to take those environmental consequences into account.

[00:45:44] Speaker 02:
I would add that FERC itself found that these downstream emissions were reasonably foreseeable.

[00:45:50] Speaker 02:
There's no dispute about that.

[00:45:53] Speaker 05:
On the design day demand, you mentioned that, in your view, the certificate order is issued to account for four days of potentially inadequate capacity, and petitioners liken building the pipeline to buying a car to take care of having to go to the airport.

[00:46:15] Speaker 05:
once or twice a year, and that would be overly expensive purchase for those rare instances.

[00:46:20] Speaker 05:
But I guess it's unclear to me what the relationship is between peak demand days and the general demand curve.

[00:46:27] Speaker 05:
I mean, I've assumed that the peak demand days are not the only days in which there might be a problem, but that it sort of becomes a proxy because the general

[00:46:40] Speaker 05:
the height of the curve has some relationship to the height of the peak demand days?

[00:46:47] Speaker 05:
Or is it really the case that FERC is just approving a massive investment for only a few days of shivering?

[00:46:57] Speaker 02:
I think it is basically the latter.

[00:46:59] Speaker 02:
FERC is very clear in its order that the design day is the basis for planning gas capacity.

[00:47:10] Speaker 02:
Remember, design day demands are already really conservative estimates, about 35% on average greater than even historical peak demands.

[00:47:22] Speaker 02:
You already have a reliability buffer built in there.

[00:47:26] Speaker 02:
What we see in FERC's order is just a layering on of

[00:47:32] Speaker 02:
reliability benefit, reliability buffer, one on top of the other.

[00:47:36] Speaker 02:
We're gonna overestimate demand.

[00:47:39] Speaker 02:
We're gonna assume that supplies on which the utilities historically have relied won't be there.

[00:47:44] Speaker 02:
Actually, they don't even make that assumption.

[00:47:45] Speaker 02:
They simply say it's possible.

[00:47:48] Speaker 02:
At some point, there's a limit, and you have to grapple with what are the costs of trying to achieve that level of reliability.

[00:47:59] Speaker 05:
And on the other side of the balance, the benefits to rate payers, is there any known model or are there cases in which FERC has actually done some kind of quantitative, even if rough or range-based, some kind of quantitative calculation of the value of the benefits?

[00:48:27] Speaker 05:
And is that something that any case that you're aware of dealing with certificate orders has required?

[00:48:34] Speaker 02:
I'm not aware of one, but FERC deals with these kinds of issues and manages to quantify them or provide ranges all the time.

[00:48:45] Speaker 02:
I think that certainly is the kind of evidence that FERC could consider.

[00:48:53] Speaker 02:
And as I mentioned in this case, FERC didn't rest on any attempt to quantify in any sense, even roughly, the magnitude of the benefits on which it was relying.

[00:49:14] Speaker 02:
Again, we would urge the court to please vacate for its order.

[00:49:19] Speaker 02:
I'm sorry, do you have another question?

[00:49:20] Speaker 05:
I did have a question about the upstream harms and what

[00:49:29] Speaker 05:
what those are, and just if you would sum up the concerns about FERC's treatment of them.

[00:49:34] Speaker 02:
Are you referring to the upstream greenhouse gas emissions?

[00:49:40] Speaker 02:
Candidly, Your Honor, that is not an issue that we briefed.

[00:49:42] Speaker 02:
I think I would defer to my colleague to address that on rebuttal.

[00:49:48] Speaker 02:
Thanks.

[00:49:48] Speaker 02:
All right.

[00:49:49] Speaker 02:
Thank you very much.

[00:50:00] Speaker 05:
My name is Perry.

[00:50:03] Speaker 05:
You may proceed when you're ready.

[00:50:04] Speaker 04:
Good morning.

[00:50:06] Speaker 04:
I would like to start just in response to your question, Judge Pillard, about the interruptible demand.

[00:50:15] Speaker 04:
There were separate findings.

[00:50:17] Speaker 04:
There are numerous public benefits and need factors that the commission looks at.

[00:50:23] Speaker 04:
under the certificate policy statement, meeting uncertain demand, eliminating bottlenecks, access to new supplies, lower cost to consumers, competitive alternatives, reliability.

[00:50:37] Speaker 04:
And here the commission found, A, that this was needed.

[00:50:42] Speaker 04:
for reliability for the local distribution customers, which include the New Jersey local distribution companies and also one PICO in southeastern Pennsylvania.

[00:50:55] Speaker 04:
But the interruptible finding was a separate finding of benefit.

[00:50:59] Speaker 04:
In addition to the reliability benefit that this project would provide,

[00:51:04] Speaker 04:
The commission found that it would also eliminate bottlenecks and pipeline constraints that made Transco unable to provide interruptible service to gas generators.

[00:51:16] Speaker 04:
when there was peak demand because there wasn't any excess capacity left over.

[00:51:23] Speaker 04:
And that was a benefit and would also provide cost savings.

[00:51:27] Speaker 04:
And they also found that there was a benefit of supply diversity.

[00:51:32] Speaker 04:
But those are additional benefits.

[00:51:34] Speaker 04:
The reliability benefit, the design day demand that we have been talking about is a separate issue.

[00:51:41] Speaker 04:
from the interruptible.

[00:51:43] Speaker 05:
Can you unpack supply diversity for us more concretely and show us in the record where that's more concretely discussed?

[00:51:51] Speaker 05:
Because I have seen the present that you're talking about that refers to the sort of benefits of diversity and the like as Ipsy Dixit.

[00:52:04] Speaker 05:
And I'd like to hear from you on where the more robust and concrete support is.

[00:52:10] Speaker 04:
Well, Your Honor, the Commission pointed out that this project would interconnect

[00:52:18] Speaker 04:
the Transco system and these shippers to three large gathering systems.

[00:52:24] Speaker 04:
That's a source of additional supply.

[00:52:27] Speaker 04:
I mean, they have access to all of the producers that are interconnected to all of those large gathering systems, and that's additional supply.

[00:52:36] Speaker 04:
And you can see that, I mean, this is discussed at paragraph 68 of the certificate order,

[00:52:41] Speaker 04:
And also in paragraph 94 of the rehearing order.

[00:52:45] Speaker 04:
And so that is clearly supply diversity, access to producers that they don't currently have access to.

[00:52:53] Speaker 04:
And they are large gathering systems, three separate ones.

[00:52:56] Speaker 04:
So it's a fair amount of additional supply diversity.

[00:53:01] Speaker 05:
I had a question for the foundation that I also would like

[00:53:06] Speaker 05:
to ask you, and I know that we do rely on precedent agreements to show market need, but given that FERC's own standard is articulated in terms of new demand, new users, how does a precedent agreement with an existing LDC that has existing customers actually show that this

[00:53:34] Speaker 05:
is not going to be developed and paid for by existing ratepayers.

[00:53:44] Speaker 04:
Well, the market needs showing in this case, Your Honor, has to do with the reliability requirements

[00:53:51] Speaker 04:
and with the other benefits that come from the project.

[00:53:55] Speaker 04:
This is not, I'm not aware of, in thinking back on the precedent agreement cases, I'm not aware of ones that have to do specifically with local distribution companies, but the commission clearly found that there was a reliability need for this project in addition to the other benefits of the project, and that satisfies the

[00:54:19] Speaker 04:
its Natural Gas Act responsibility to find the project in the public need and convenience.

[00:54:27] Speaker 05:
And so it's less about a price benefit and more about reliability?

[00:54:31] Speaker 04:
Exactly, Your Honor.

[00:54:32] Speaker 04:
I mean, the Commission's statutory responsibility includes assuring reliable supplies of natural gas, and that's exactly what they were looking at in this case.

[00:54:45] Speaker 04:
is making sure that there were reliable supplies of natural gas to these local distribution companies.

[00:54:50] Speaker 05:
And what's your explanation, just following up on the question that I asked Mr. Schwartz, about the design day as the indicator of the need for more capacity?

[00:55:00] Speaker 05:
Is that just building a pipeline to make sure that there aren't four really bad days?

[00:55:08] Speaker 05:
And I don't mean to understate

[00:55:10] Speaker 05:
the importance of having reliability on those days of peak demand, but do you have a different understanding than what Mr. Schwartz articulated about the role of the peak need days in the study and their relationship to the rest of the capacity curve?

[00:55:35] Speaker 04:
The design day planning is designed to make sure that local distribution companies can meet their statutory obligation to provide reliable service.

[00:55:45] Speaker 04:
And this is the standard by which local distribution companies and their capacity arrangements are judged.

[00:55:54] Speaker 04:
New Jersey judges them that way.

[00:55:55] Speaker 04:
That's why they make filings every year that has design day projections.

[00:56:00] Speaker 04:
It has their available capacity.

[00:56:01] Speaker 04:
They have to make sure that they meet this standard of reliability.

[00:56:06] Speaker 04:
And Pennsylvania requires it too.

[00:56:08] Speaker 04:
The states require it.

[00:56:10] Speaker 04:
The commission recognizes it.

[00:56:11] Speaker 04:
This is a recognized means of assuring sufficient reliability for parties who have statutory obligation to provide reliable service.

[00:56:22] Speaker 05:
So is it akin to buying a car because you don't know whether you're going to be able to hail a cab on the four days a year that you have to go to the airport and it's more important than that and therefore we're willing to buy the car?

[00:56:37] Speaker 04:
I don't think you can simplify it.

[00:56:41] Speaker 04:
Well, let me state first for the record, nobody in this case has challenged the design day planning, that that is the appropriate standard for it to be used.

[00:56:50] Speaker 04:
And it's the standard that is used universally for making this judgment.

[00:56:55] Speaker 04:
Nobody has challenged design day planning.

[00:56:58] Speaker 04:
But design day planning is set up that way because you can anticipate, particularly in this age of climate change and

[00:57:07] Speaker 04:
severe weather events.

[00:57:09] Speaker 04:
You can't anticipate what may be coming.

[00:57:12] Speaker 04:
And so you don't know how many days may be peak days, may be higher than historical peak days coming up.

[00:57:21] Speaker 04:
And so what you're doing is assuring, giving enough margin, as my colleague just said a few minutes ago, 35% over the historical peak is kind of the area that you're talking about.

[00:57:36] Speaker 04:
You're giving that margin to make sure

[00:57:38] Speaker 04:
The reliability will exist because this is heat to people's homes.

[00:57:43] Speaker 04:
This is, you know.

[00:57:45] Speaker 03:
And why not on this type of project not have the evidentiary hearing?

[00:57:49] Speaker 03:
Because you could, you know, challenge statistical models, challenge the studies, challenge what is the actual cost to the ratepayers.

[00:57:59] Speaker 04:
This court has always said that the commission has discretion about whether or not to have an evidentiary hearing or to have a hearing on paper.

[00:58:05] Speaker 04:
But my question is, why not?

[00:58:07] Speaker 04:
Well, the commission felt that having reviewed the studies, it had a sufficient understanding of what was being claimed.

[00:58:14] Speaker 03:
But didn't you decline to basically look at climate change?

[00:58:20] Speaker 04:
Well, Your Honor, the climate change doesn't have anything to do with the studies.

[00:58:25] Speaker 04:
And petitioners' counsel said they didn't even want an evidentiary hearing as to the climate change issue.

[00:58:32] Speaker 04:
So they were only asking for it as to the studies.

[00:58:38] Speaker 03:
But that's a different question.

[00:58:39] Speaker 03:
I'm not asking about climate change with respect to the evidentiary hearing.

[00:58:42] Speaker 03:
I'm asking about climate change insofar as the environmental impacts, just further quantifying that.

[00:58:51] Speaker 04:
Well, Your Honor, the Commission quantified the environmental impacts in the manner that this Court has affirmed on several occasions, most recently in the Center for Biological Diversity case.

[00:59:04] Speaker 04:
It's calculated the emissions and it compared those emissions to state

[00:59:10] Speaker 04:
state inventories and to state greenhouse gas emission goals.

[00:59:18] Speaker 04:
And this court has said Center of Biological Diversity Appalachian Voices, the Sierra Club decision at 867 F3rd, there's so many of them, but 867 F3rd is the one who said,

[00:59:31] Speaker 04:
You can do it this way.

[00:59:33] Speaker 04:
You can analyze greenhouse gases this way.

[00:59:37] Speaker 04:
And so the commission did that.

[00:59:39] Speaker 04:
What this court has said is adequate.

[00:59:42] Speaker 04:
And the commission also calculated the social cost of carbon.

[00:59:47] Speaker 04:
But the commission found that it couldn't attach a significance label

[00:59:52] Speaker 04:
to the social cost of carbon, which has also been affirmed by this court, including in the Center of Biological Diversity.

[01:00:00] Speaker 01:
Significance aside, where would you point us in the orders to show that the commission actually considered all of this information, 11.8% more in New Jersey and et cetera, et cetera, about the seemingly large amount of greenhouse gas emissions here, and found that the benefits of the project outweighed them?

[01:00:22] Speaker 01:
Under section 7 of the Natural Gas Act.

[01:00:25] Speaker 04:
Well, your honor pointed earlier to the paragraph 81 of the certificate order where the Commission said that considering all of the environmental discussion that it found on balance that this was an environmentally acceptable action.

[01:00:40] Speaker 01:
But how can we know whether the

[01:00:42] Speaker 01:
There's two possibilities.

[01:00:43] Speaker 01:
The commission laid out the information, the social cost of carbon, and then said, as the D.C.

[01:00:49] Speaker 01:
Circuit has said, we don't have to put the significance label on it, so we're forgetting about it, versus this conclusory sentence at the end means we really thought about those emissions and find them outweighed.

[01:01:04] Speaker 04:
The conclusory sentence at the end, Your Honor, is the conclusion of an enormous discussion of all kinds of impacts.

[01:01:14] Speaker 04:
I mean, to wildlife, to water, to air, to... The commission didn't list all of those in the conclusory statement, but that doesn't mean that the commission didn't consider them.

[01:01:25] Speaker 04:
They talked about them.

[01:01:26] Speaker 05:
Wait, so is it your position that the commission did include in its Section 7 balancing the greenhouse gas emissions?

[01:01:35] Speaker 05:
I thought those were set to the side.

[01:01:37] Speaker 04:
They weren't set to the side, Your Honor.

[01:01:39] Speaker 04:
What they don't do is assign

[01:01:42] Speaker 04:
a significance label to it, but they certainly consider it along with everything else.

[01:01:47] Speaker 04:
It's in the environmental impact statement.

[01:01:49] Speaker 04:
That's the purpose of going through the analysis in the environmental impact statement.

[01:01:54] Speaker 04:
Like this court said in the Sierra Club decision, citing to Wild Earth, the estimated levels of greenhouse gas emission is basically a reasonable proxy

[01:02:06] Speaker 04:
for climate change impacts.

[01:02:09] Speaker 04:
And the commission considered it by making the comparisons, making the calculations and making the comparisons that this court has said are acceptable and taking that into consideration.

[01:02:21] Speaker 01:
You've said it's acceptable from a NEPA perspective.

[01:02:24] Speaker 04:
Exactly.

[01:02:25] Speaker 01:
Have we said something like that is acceptable under section three or section seven of the gas act?

[01:02:31] Speaker 01:
Without any evidence that you actually consider.

[01:02:33] Speaker 01:
It says for informational purposes to the public, here's how bad it's going to be.

[01:02:37] Speaker 01:
And then there's no other mention of these emissions.

[01:02:40] Speaker 04:
Well, the informational purposes to the public has more to do with the social cost of carbon calculation, I think.

[01:02:47] Speaker 04:
The commission makes the social cost of carbon calculation and says, we can't attach any significance to that.

[01:02:54] Speaker 04:
But that doesn't mean that the calculation of greenhouse gas emissions and the comparisons of those to the national and state inventories

[01:03:04] Speaker 04:
The commission takes that into consideration, and it's a way of assessing.

[01:03:08] Speaker 03:
But how much weight do you give to the state's own calculations or the state's conclusions and recommendations about its own legislation in trying to reduce gas emissions or the fact that it is saying, we don't need this?

[01:03:25] Speaker 03:
How does the commission just override that, to me, very compelling statement by the state?

[01:03:32] Speaker 04:
Here basically is what the commission's final take on that was.

[01:03:36] Speaker 04:
If you look at paragraph 70 of the rehearing order, what the commission said was they have a goal by 2050 to reduce their greenhouse gas emissions by 80%.

[01:03:49] Speaker 04:
We are looking at a situation now where there's a reliability need now for this project.

[01:03:58] Speaker 04:
There have been no alternatives proposed that would suffice to cover this reliability need right now.

[01:04:06] Speaker 04:
And our statutory responsibility is to assure reliable service.

[01:04:10] Speaker 04:
And so therefore, in our public need, public necessity inconvenience calculation,

[01:04:17] Speaker 04:
We can't let the 2050 goal of the state override our assessment that there is an immediate need for reliability.

[01:04:28] Speaker 04:
And this project is the only alternative that has been offered to us that would solve that problem.

[01:04:36] Speaker 01:
And that was... Can I take you back to the studies and this reliability finding?

[01:04:43] Speaker 01:
Do you agree that the sort of key dispute

[01:04:46] Speaker 01:
Key difference between these studies is whether or not they take into account non-firm supply.

[01:04:53] Speaker 01:
That certainly seems to be the case from the orders and the sheer quantity of these non-firm, I'm not sure, off-peaking resources.

[01:05:04] Speaker 01:
That's the main difference.

[01:05:06] Speaker 01:
Is that correct?

[01:05:07] Speaker 04:
It's that and it's also the demand growth projections.

[01:05:12] Speaker 05:
And that's basically interruptible demand?

[01:05:15] Speaker 04:
No, no, no, Your Honor.

[01:05:16] Speaker 04:
That's the local distribution companies for projecting design day demand.

[01:05:22] Speaker 04:
1.02%.

[01:05:25] Speaker 04:
And in the base case for the New Jersey study, they were projecting design day demand, which means the LDC demand of .80, .8% in their base case.

[01:05:40] Speaker 04:
But the off-system peaking, if you... This is a much bigger variable, right?

[01:05:45] Speaker 01:
It's 619,000 decotherms they assume will be available.

[01:05:48] Speaker 01:
This whole project is for 800,000.

[01:05:50] Speaker 01:
I think on the demand side, we're talking about fractions of a percent, right?

[01:05:54] Speaker 01:
So the focus should be on this supply side issue?

[01:05:59] Speaker 04:
Certainly, Your Honor.

[01:06:01] Speaker 04:
I would like to clear up, though, a factual issue which seems to have been coming out wrong earlier in this.

[01:06:10] Speaker 04:
argument, which is in the Transco study, they did not assume that all of that third-party peaking contracts would be unavailable.

[01:06:22] Speaker 04:
What they assumed was, and you can see this at certificate order, paragraph 27, the rehearing order, paragraphs 40 and 41.

[01:06:34] Speaker 04:
Actually, petitioners' reply brief at 13 notes this, too.

[01:06:39] Speaker 04:
The only thing they discounted was off-system peaking contracts that were with parties who did not have firm delivery in the region, which is New Jersey and southeastern Pennsylvania.

[01:06:54] Speaker 01:
Do you know what the magnitude of that is?

[01:06:57] Speaker 04:
Well, here's the thing, the magnitude, the ones who do have primary delivery points in that region was 407 million decotherms.

[01:07:11] Speaker 04:
But you have to bear in mind, because everything is a little more complicated, that the trans-coast study, the region was not just New Jersey, it was also southeastern Pennsylvania where PICO is.

[01:07:24] Speaker 04:
And on the other hand, the New Jersey study was only New Jersey.

[01:07:28] Speaker 04:
So that 400 that the Transco study said would still be available is less than that for New Jersey.

[01:07:36] Speaker 04:
But there weren't numbers breaking out New Jersey separately.

[01:07:40] Speaker 04:
So I don't know.

[01:07:41] Speaker 04:
But there's still, but so I just wanted to make it clear that they're not saying all 619 is not going to be available.

[01:07:49] Speaker 01:
Let's say they're saying it's about 300, right?

[01:07:52] Speaker 01:
Or something.

[01:07:54] Speaker 01:
I won't hold you to that.

[01:07:55] Speaker 01:
But the key, what I want to get your response to is that the key explanation from FERC about why it's

[01:08:05] Speaker 01:
reasonable to assume these contracts will not be available is in paragraph 65 of the rehearing order which essentially says these are short-term contracts and they're subject to competition and so we'll assume that they won't be available and I think the question they're asking is shouldn't you have to at least point to some time anywhere where these have not been available in order to make that extremely conservative assumption

[01:08:34] Speaker 04:
Well, a couple of things about that, Your Honor.

[01:08:37] Speaker 04:
One, the New Jersey study itself listed this as a caveat to its conclusion that there would be enough supply.

[01:08:47] Speaker 04:
At page 100 of the New Jersey study, they say a caveat is we're assuming the same volume of off-system supplies are going to be available for the next 10 years.

[01:08:59] Speaker 04:
That's a caveat to their conclusion.

[01:09:02] Speaker 04:
Secondly,

[01:09:04] Speaker 04:
Um, it, now I've forgotten where I was going with secondly.

[01:09:10] Speaker 01:
Well, let me ask you a specific question because something you said earlier.

[01:09:13] Speaker 01:
Go ahead.

[01:09:15] Speaker 04:
Um, you're asking for the basis for the conclusion.

[01:09:18] Speaker 04:
The reason why.

[01:09:21] Speaker 04:
In the Transco study explains this, the reason why Transco excluded people who don't have primary points in the service area is that those are a scheduling risk.

[01:09:34] Speaker 04:
Because if the primary points are fully used by people who have primary access to those points, secondary point service, which is what you would have,

[01:09:46] Speaker 04:
If you were buying capacity from somebody who doesn't have primary points in the region, secondary point service doesn't get priority for scheduling.

[01:09:55] Speaker 04:
And so you can't on a design day when everything is at its peak, you can't count on that.

[01:10:01] Speaker 01:
Has there been a weather event where these types of resources with secondary delivery points are unavailable to LDCs in New Jersey?

[01:10:13] Speaker 04:
I don't, I don't know.

[01:10:14] Speaker 01:
Neither do I. And I think the point is that, you know, if we can just say climate change is happening and weather is going to get bad, that's always going to justify approving any project.

[01:10:28] Speaker 01:
And why can't we insist on a little more detail about the basis for these projections from FERC?

[01:10:35] Speaker 04:
The point is that you need to be conservative about this assumption.

[01:10:40] Speaker 04:
And the commission was making conservative assumptions when you're talking about anything that is not firm priorities, primary point, reliable service.

[01:10:52] Speaker 04:
The commission said that for a design day, you can't count on interruptible service.

[01:10:57] Speaker 04:
You can't count on secondary service.

[01:10:59] Speaker 04:
You have to have primary service.

[01:11:01] Speaker 01:
But what's the evidence for that?

[01:11:03] Speaker 01:
I think my question was, when have they not been able to count on secondary service and interruptible service?

[01:11:10] Speaker 01:
And I think it's undisputed that there's never been an instance where that's been the case.

[01:11:15] Speaker 01:
Maybe we still have to, I want to be clear, maybe we still have to defer to FERC's projections.

[01:11:20] Speaker 01:
But you agree, there's no evidence this has ever happened.

[01:11:24] Speaker 01:
We've had bad weather before.

[01:11:27] Speaker 04:
There was nothing in the record that had evidence of that, but I'm not sure anybody specifically looked into that.

[01:11:37] Speaker 05:
The New Jersey Council said, we've been doing it this way, principally relying, almost exclusively relying on this kind of contract.

[01:11:47] Speaker 05:
We've been doing it for, I think they said 20 years.

[01:11:52] Speaker 05:
Yes, I think everybody also has assumptions and assertions that things are changing, but that's something on the other side of the ledger.

[01:12:04] Speaker 04:
Well, right, your honor.

[01:12:05] Speaker 04:
But again, the commission wasn't saying, and Transco wasn't saying that all of these are not available.

[01:12:10] Speaker 04:
It's only the ones with secondary points.

[01:12:13] Speaker 04:
And it's possible that, well, and you have to consider the fact, too, the New Jersey Natural Gas, the 200 million thousand deca-therms that they said they were not going to contract for after 2021, they were nevertheless counted in the New Jersey's

[01:12:30] Speaker 04:
calculation.

[01:12:31] Speaker 04:
And if you look at their scenario 1A, for example, which is where they use the LDCs on demand growth, their surplus was 163,000 decotherms in 2030, and the 200,000

[01:12:52] Speaker 04:
thousand decatherms that New Jersey Natural Gas is not taking would make the difference between that being a surplus and being a deficit.

[01:13:02] Speaker 05:
I thought they were arguing that they're not maybe confusing different arguments, there's a lot of numbers in this case, but I thought they were saying they weren't taking it only because it hadn't gotten around to the cycle when they needed to contract for it.

[01:13:13] Speaker 04:
All of the other

[01:13:15] Speaker 04:
local distribution companies projected their third-party use.

[01:13:19] Speaker 04:
And the New Jersey agency, in calculating these figures, said, we're using the local distribution company's own projections for their third-party contracts.

[01:13:31] Speaker 04:
They said that.

[01:13:32] Speaker 04:
That was the basis for the numbers that they used, except when it comes to New Jersey natural gas, and then we don't like their projections, and we're not going to use them.

[01:13:41] Speaker 05:
You have mentioned several times the responsibility of the Commission to ensure reliability.

[01:13:51] Speaker 05:
It is also the commission's position that it is the entity responsible for weighing the environmental costs.

[01:14:00] Speaker 05:
Is that correct?

[01:14:02] Speaker 04:
Exactly, Your Honor.

[01:14:02] Speaker 04:
That goes into the calculation of the benefits and harms of the project.

[01:14:08] Speaker 05:
And so when it's weighing the peak demand day and the capacity shortfall,

[01:14:17] Speaker 05:
Is it part of the weighing when FERC concludes it may be cheaper to build more gas supply now than to rely on pricey, peaking resources?

[01:14:32] Speaker 05:
If New Jersey and maybe Maryland, other states say, well, that's the point.

[01:14:37] Speaker 05:
It should be more expensive because we're in a process of trying to transition to less greenhouse gas emitting resources.

[01:14:46] Speaker 05:
Is that an argument that is in FERC's competence taken into account or not?

[01:14:54] Speaker 05:
And if not, whose responsibility is it?

[01:14:59] Speaker 04:
The commission could take it into account, but the commission found in this case that that was not an alternative to the project, that it wouldn't meet the reliability need, the off-system peaking contracts, and say therefore they didn't consider that, because it wouldn't meet the reliability.

[01:15:16] Speaker 04:
Didn't consider what?

[01:15:17] Speaker 04:
Well, they wouldn't consider that as an alternative, in essence, to the project.

[01:15:21] Speaker 05:
Didn't consider what as an alternative?

[01:15:23] Speaker 04:
The off-system peaking contracts, that they could

[01:15:27] Speaker 04:
get off-system peaking contracts that would cover the deficit in reliability.

[01:15:33] Speaker 05:
So their assumption is not that they would be more expensive, but that they just would be actually unavailable?

[01:15:39] Speaker 04:
That there wouldn't be enough available to cover the deficit in the local distribution company's capacity that was needed for reliability.

[01:15:51] Speaker 04:
The commission's conclusion was is that basically starting right away, there needed to be capacity because there was no other alternative that would meet that need.

[01:16:02] Speaker 04:
And that includes the off-system peaking resources.

[01:16:10] Speaker 01:
Can I ask you a question about, there's a lot of issues in this case, but one of them is on the

[01:16:16] Speaker 01:
Refusal to make a significance determination underneath a specifically for greenhouse gases and my question is about northern natural.

[01:16:24] Speaker 01:
So the petitioners raised that case, which has I understand the facts are specific, but as some very broad language that says,

[01:16:36] Speaker 01:
We find there is nothing about GHG emissions or the resulting contribution to climate change that prevents us from making that same type of significance determination.

[01:16:46] Speaker 01:
And I think the rehearing order on 854 and 55 acknowledges that argument and then doesn't respond.

[01:16:54] Speaker 01:
Why isn't that?

[01:16:55] Speaker 01:
It's a seemingly on-point authority.

[01:16:58] Speaker 01:
We've reached the opposite outcome here.

[01:17:00] Speaker 01:
Why isn't that arbitrary and capricious?

[01:17:03] Speaker 01:
And why shouldn't we remand for an explanation about what was different between Northern natural in this case?

[01:17:09] Speaker 04:
Well, your honor, Northern natural

[01:17:12] Speaker 04:
specifically says in paragraph 33, it references the commission's ongoing proceeding to figure out how to deal with the significance issue in greenhouse gas emissions, and specifically says, however the commission's approach to significance evolves, this case is not significant.

[01:17:33] Speaker 04:
Where does it say that?

[01:17:35] Speaker 04:
In paragraph 33.

[01:17:36] Speaker 04:
Of?

[01:17:37] Speaker 04:
Of Northern Natural.

[01:17:40] Speaker 04:
Yes.

[01:17:40] Speaker 05:
Sorry.

[01:17:41] Speaker 05:
I thought you were characterizing something in this case, and that was surprising to me.

[01:17:44] Speaker 04:
Oh, no.

[01:17:45] Speaker 04:
Sorry, Your Honor.

[01:17:45] Speaker 04:
It's been Northern Natural.

[01:17:46] Speaker 04:
And then they go on to talk about the tiny, tiny greenhouse gas emissions from that case.

[01:17:53] Speaker 06:
Right.

[01:17:53] Speaker 04:
And so I would say Northern Natural was an oddity in Commission's precedence.

[01:18:02] Speaker 04:
And it was specifically saying, whatever standard we ultimately decide on for significance, this is not a significant case.

[01:18:11] Speaker 01:
So why isn't 50% of New Jersey's future greenhouse gas targets

[01:18:16] Speaker 01:
whatever definition you choose significant.

[01:18:21] Speaker 01:
It seems like the opposite might be true here, and there's no explanation of why that's not the case.

[01:18:27] Speaker 04:
The commission found that it couldn't attach significance to the state's greenhouse gas emission targets.

[01:18:36] Speaker 04:
And this is in the EIS at 4-175, and it's also discussed at the rehearing order, paragraph 107, that it couldn't translate that into a significance determination.

[01:18:50] Speaker 04:
But ultimately, again, it goes back to the commission's point that a 2050 greenhouse gas emission target doesn't change the fact that it is looking now at a situation where there is not adequate capacity for reliability.

[01:19:07] Speaker 04:
And there are no alternatives proposed that would solve that.

[01:19:10] Speaker 01:
That absolutely matters for Section 7, but under NEPA.

[01:19:13] Speaker 01:
I guess that's still wondering why there wasn't a requirement for the commission to explain in northern natural this case that has been specifically raised to us.

[01:19:23] Speaker 01:
All we said there was that it was so insignificant and you can't do the inverse and assign a significance label for XYZ reasons.

[01:19:32] Speaker 01:
That's just not in the order.

[01:19:36] Speaker 04:
What's in the order is the commission's explanation for how it cannot assign significance.

[01:19:42] Speaker 04:
And this court has affirmed the commission issuing orders that do not assign significance to greenhouse gas emissions.

[01:19:50] Speaker 01:
Have we done that for orders issued since Northern Natural yet?

[01:19:55] Speaker 01:
I'm not sure we have.

[01:19:58] Speaker 04:
Center for Biological Diversity, I think, may have been post-Northern Natural.

[01:20:03] Speaker 04:
I'm not sure about that, but I think it might have been.

[01:20:19] Speaker 04:
Your Honor, would you like me to address the upstream?

[01:20:22] Speaker 05:
Yeah, I just have a question about the design day.

[01:20:30] Speaker 05:
What goes into determining the design day?

[01:20:34] Speaker 05:
And does interruptible demand figure into the commission's concerns about inadequate capacity?

[01:20:48] Speaker 04:
Oh no, absolutely not.

[01:20:49] Speaker 04:
That was a completely separate benefit to the project of serving interruptible gas generators who were getting curtailed under current circumstances.

[01:21:03] Speaker 04:
that has nothing to do with Design Day.

[01:21:05] Speaker 04:
Design Day is all about whether the local distribution company's own capacity is sufficient to meet the Design Day projections.

[01:21:14] Speaker 04:
And that's why they make filings with the state every year that have those demands and projections and their available capacity projections.

[01:21:30] Speaker 05:
At one point, the commission refers to LDC planning practices

[01:21:44] Speaker 05:
nationwide, and I'm looking at paragraph 41, that the Transco study was based on traditional LDC supply planning practices.

[01:22:00] Speaker 05:
And it says those practices were developed under the supervision of state regulators nationwide.

[01:22:06] Speaker 05:
And it just struck me that the deference to a kind of an

[01:22:10] Speaker 05:
norm of all states is used in some sense to trump the actual planning by the states involved in this case, principally New Jersey, but also Maryland.

[01:22:24] Speaker 05:
And I wondered if you had any comment on why that would be the more reasonable assumption to use.

[01:22:37] Speaker 04:
I don't think it's that, Your Honor.

[01:22:39] Speaker 04:
I mean, New Jersey employs the same design day planning standards that everybody else does.

[01:22:46] Speaker 04:
I mean, that wasn't meant to distinguish what they're doing.

[01:22:50] Speaker 04:
And as a matter of fact, the New Jersey study was presented, but they didn't even oppose

[01:23:01] Speaker 04:
They didn't oppose the project and the New Jersey study had nothing to do with the project.

[01:23:10] Speaker 04:
It was done before the project was proposed and the project was not at issue there.

[01:23:17] Speaker 04:
But their design day standard is not any different than anyone else's.

[01:23:24] Speaker 05:
Yeah, I'm just looking at this one paragraph and it says, despite the shortcomings in the Transco study, it was generally consistent with accepted traditional LDC supply planning practices.

[01:23:35] Speaker 05:
So this is about supply planning.

[01:23:37] Speaker 05:
And the commission determined that Transco factored in competing demand for natural gas from electric generators.

[01:23:48] Speaker 05:
But I thought you had just answered my question and said,

[01:23:52] Speaker 05:
that the demand aid doesn't consider demand for natural gas, but this is saying that it more accurately reflects overall future demand to factor that in rather than focusing only on LDC.

[01:24:05] Speaker 05:
So this is a difference between the studies and the demand aid figure.

[01:24:11] Speaker 05:
Is that what I'm missing?

[01:24:14] Speaker 04:
It was a separate...

[01:24:15] Speaker 04:
Senates for a separate benefit from the project and a benefit of the transco study which it evaluated that separate benefit of the project which the New Jersey study only concerned design day and didn't concern interruptible service and

[01:24:30] Speaker 04:
But that wasn't meant to say that the interruptible service has anything to do with design day planning.

[01:24:35] Speaker 04:
You don't plan capacity around interruptible customers.

[01:24:39] Speaker 04:
But it is a benefit to the project as recognized by the certificate policy statement to serve additional demand and to provide better and more reliable service to other sectors of demand who aren't the local distribution company customers.

[01:25:01] Speaker 05:
precedent agreements that Transco submitted to support the project.

[01:25:06] Speaker 04:
That's right, Your Honor.

[01:25:07] Speaker 04:
I mean, these interruptible customers are taking from people who have firm contracts.

[01:25:12] Speaker 04:
The customers who contracted for the project capacity are firm customers.

[01:25:22] Speaker 04:
Did you want me to address upstream?

[01:25:25] Speaker 05:
Yes, please.

[01:25:26] Speaker 05:
Yes.

[01:25:27] Speaker 04:
Essentially what the commission found with respect to the upstream emissions was there was a two-fold reason why the upstream emissions were not properly considered in its environmental analysis.

[01:25:43] Speaker 04:
Both reasons are based on this court's precedent in the Delaware Riverkeeper case and particularly in this court's Berkhead decision.