The ruling is important for two reasons. First, it rejected FERC’s decision to base its finding of necessity for a new pipeline solely on a contract between the pipeline sponsor and its own affiliate company as customer for the gas.
Second, and perhaps most importantly, it chastised FERC for deferring completely to the pipeline sponsor’s judgment regarding pipeline need and failing to conduct any analysis of its own.
IEEFA has documented FERC’s repeated failure to analyse the actual market conditions for interstate gas pipeline projects and its ill-advised reliance on the assertions of pipeline applicants. Several major pipeline projects approved by FERC have been later abandoned. The court’s ruling is consonant with the position that FERC has a regulatory duty to undertake its own analysis of the purported benefits of a project and weigh those benefits against the impacts.
In the Spire STL Pipeline case, the commission had granted a “certificate of public convenience and necessity” for the project in 2018, even though an “open-season” invitation for natural gas shippers to enter into preconstruction contracts, known as “precedent agreements,” had resulted in no takers. After the closing of the unsuccessful invitation for bidders, Spire STL had entered into a precedent agreement with one of its own affiliated companies, now known as Spire Missouri Inc., for 87.5% of the pipeline’s projected capacity. The Environmental Defense Fund, buttressed by an amicus brief filed by pipeline decision-making policy expert Susan Tierney, challenged the FERC decision.
[Elizabeth Corner, Suzanne Mattei]