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AG Derek Schmidt: FERC use of ‘social cost’ analysis for energy projects would be flawed, illegal regulation

Release Date: Apr 27, 2021

TOPEKA – (April 27, 2021) – Use of a so-called “social cost of carbon” analysis is beyond the legal scope of federal energy regulators to approve or deny permits for critical interstate natural gas pipeline construction, Kansas Attorney General Derek Schmidt said today.

Schmidt joined a coalition with 21 other state attorneys general in filing comments with the Federal Energy Regulatory Commission concerning implementation of President Biden’s mandate to impose a social cost factor for certain greenhouse gases to address climate issues. The comment letter was filed Monday evening.

The attorneys general argue that neither the Natural Gas Act (NGA) nor the National Environmental Policy Act (NEPA) authorizes FERC to use the “social cost of carbon” analysis in consideration of certification applications, that the analysis is speculative and scientifically flawed, and that FERC should adhere to its previous position that “social cost of carbon” analysis is not appropriate for NEPA analysis.

FERC is charged by Congress with reviewing and certifying applications for interstate natural gas pipeline projects proposed by private companies.

The letter follows action in March when Schmidt joined a coalition of 12 attorneys general in filing a federal lawsuit challenging President Biden’s Executive Order 13990, which attempts to impose binding rules that federal agencies must use to calculate the “social costs” of greenhouse gases when creating federal regulations. The suit alleges that the Biden administration has no statutory authority to decree the formula to be used for calculating those costs. The potential stringency of federal regulations imposed at the direction of that executive order would stifle manufacturing, harm agriculture, and cause serious damage in Kansas and across the country, the attorneys general argue.

The letter argues that FERC applying “social cost of carbon” analysis to certifications is not authorized by the NGA or the NEPA. Implementing the analysis would serve to increase costs based on speculation of future climate outcomes, instead of rendering natural gas abundant and affordable as required by statute.

“Congress’s subsequent actions further show that the ‘public interest’ in the NGA is concerned with keeping natural gas widely available and affordable.” To that point, the letter says, “In the NGA, Congress did not vest FERC with the authority of an international commission to mitigate global climate change, and certainly no statute contains a ‘clear’ statement of such an extraordinary delegation of authority.”

Similarly, as it relates to NEPA, the letter contends, “Likewise, NEPA does not mandate or permit FERC to use the SCC for pipeline certifications. Like the NGA, NEPA does not contain any clear statement of Congress delegating authority to FERC to anticipate and mitigate global climate change under the aegis of promoting abundant and affordable natural gas,” and states later, “NEPA does not authorize the Commission to use the SCC values because NEPA’s hard look requirement and proximate cause standard does not permit agencies to rely on speculative conclusions or conclusions that the agency knows reflect substandard and outdated science.”

The comment letter can be found at https://bit.ly/3gCUJ0m.

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