(WASHINGTON, D.C.) Environmental Defense Fund is challenging a decision by the Federal Energy Regulatory Commission (FERC) to approve the Spire STL project, a 65-mile long gas pipeline in Illinois and Missouri. Today, EDF filed a brief asking the U.S. Court of Appeals for the D.C. Circuit to overturn FERC’s approval of the project.
In carrying out its statutory duty under the Natural Gas Act, FERC must determine whether a pipeline is in the public interest before approving the project. In the case of Spire STL, FERC failed to engage in a rigorous determination of need, basing its approval solely on a contract between Spire STL and its affiliated company, gas utility Spire Missouri. FERC’s failure to perform its statutory duties leads to a host of negative consequences for local communities and the environment.
“FERC unlawfully approved the Spire STL pipeline without a sound determination that the project is in fact needed,” said EDF attorney Erin Murphy. “When FERC relies exclusively on an affiliate contract to justify need for a pipeline, as it did with the Spire STL project, it threatens market integrity and harms ratepayers, who ultimately end up footing the bill for unnecessary gas infrastructure.”
In explaining to the court why FERC’s action was unlawful, EDF writes:
“FERC’s orders represent an abdication of its statutory obligation to protect the public by ensuring that new interstate pipelines will serve a genuine need. Instead of rigorously analyzing whether the public interest will be served, FERC performed an illusory ‘analysis’ that rubber-stamped an unnecessary pipeline based solely on the existence of an affiliate precedent agreement that required captive ratepayers to support a project that benefits’ the affiliates’ owner. The aligned interests of the affiliates, and the ability to pass costs through to captive customers, would put any reasonably vigilant regulator on high alert. At a minimum, it would trigger FERC to perform some analysis of whether the affiliate relationship diminished the evidentiary value of the precedent agreement when evaluating need. But a majority ignored the potential for affiliate abuse entirely.”
FERC issued its initial approval for the Spire STL project in August 2018. EDF sought rehearing of that decision, which FERC denied. FERC allowed Spire STL to complete construction and begin operating the pipeline despite serious legal concerns. EDF filed a legal challenge to FERC’s approval of the Spire STL project in January.
More rigorous oversight by FERC of affiliate contracts, such as the one between Spire STL and Spire Missouri in this case, could prevent the imposition of unnecessary costs on utility customers; and could prevent locking in long-term greenhouse gas pollution and locking out clean energy alternatives over the 50-year life of new pipelines.
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