FERC Failed to Adequately Consider Environmental Impacts of Downstream GHG Emissions Under NEPA Says D.C. Circuit

by Perkins Coie
Contact

Perkins Coie

The U.S. Court of Appeals for the District of Columbia last week vacated and remanded a 2016 Order by the Federal Energy Regulatory Commission that had authorized construction and operation of the Southeast Market Pipelines Project (Project) by granting Section 7 certificates to three natural gas pipelines in Alabama, Georgia and Florida that make up the Project, on the basis that FERC failed to adequately consider the environmental impacts of downstream greenhouse gas emissions from power plants in Florida that will use the Project’s natural gas. Sierra Club v. FERC, Case No. 16-1329 (D.C. Cir. Aug. 22, 2017).

Background

On February 2, 2016, FERC issued its order granting a Section 7 certificate to each of the three pipelines based on a single environmental impact statement for the Project, which will provide natural gas to power plants in Florida. The certificate order recognized several parties as intervenors in the agency proceedings, including three environmental groups (Sierra Club, Flint Riverkeeper and Chattahoochee Riverkeeper) and two Georgia landowners. Those environmental groups and landowners timely sought rehearing and a stay of construction. FERC denied the stay, and on September 7, 2016, it denied rehearing, declining to rescind the pipelines’ certificates. The environmental groups and the landowners (Petitioners) petitioned the court for review of the certificate order and rehearing order on several grounds, including that FERC’s EIS failed to consider the Project’s contribution to GHG emissions and its impact on low-income and minority communities, as required by the National Environmental Policy Act. Petitioners also alleged other EIS deficiencies, asserted that FERC used an insufficiently transparent process to approve the pipeline certificates, disputed the public need for the Project and challenged FERC’s service rate methodology.  

Majority Opinion

Applying the Administrative Procedure Act’s deferential standard of review for challenges to agency compliance with NEPA, the court rejected most of Petitioners’ claims but held that FERC had failed to adequately consider the Project’s downstream carbon emissions. On remand, the court ordered FERC to either quantify and consider the Project’s downstream carbon emissions or explain in more detail why it cannot do so. Sierra Club v. FERC, Case No. 16-1329, slip op. at 26 (D.C. Cir. Aug. 22, 2017) (Sierra Club). In its opinion, the court distinguished its recent holdings in three similar cases in which it granted certificates to liquefied natural gas export terminals and offered the following guidance to FERC.

  • FERC’s obligation to consider downstream GHG emissions depends on the scope of FERC’s statutory authority. The court distinguished its recent decisions in Sierra Club v. FERC, 827 F.3d 36 (D.C. Cir. 2016) (Freeport); Sierra Club v. FERC, 827 F.3d 59 (D.C. Cir. 2016) (Sabine Pass); and EarthReports Inc. v. FERC, 828 F.3d 949 (D.C. Cir. 2016), where the court held that FERC had no NEPA obligation to consider the climate-change effects of exporting LNG when licensing physical upgrades for LNG export terminals. Relying on the U.S. Supreme Court’s holding in Department of Transportation v. Public Citizen, 541 U.S. 752 (2004), the court explained that an “agency has no obligation to gather or consider environmental information if it has no statutory authority to act on that information.” Sierra Club, slip op. at 21. The U.S. Department of Energy issues licenses for the export of natural gas from the United States but has delegated the authority to license physical upgrades to LNG export terminals to FERC. In Freeport, Sabine Pass and EarthReports, FERC was acting under its narrow delegation of authority from the DOE to issue LNG terminal upgrade licenses and had no legal authority to rely on the environmental effects of the LNG exports as justification for denying those upgrade licenses. 

In contrast, FERC has broad authority to consider “the public convenience and necessity” when evaluating applications for a certificate to construct and operate interstate pipelines under Section 7 of the Natural Gas Act. Id. at 22-23. “Because FERC could deny a pipeline certificate on the ground that the pipeline would be too harmful to the environment, the agency is a ‘legally relevant cause’ of the direct and indirect environmental effects of pipelines it approves.” Id. at 23 (citing Freeport, 827 F.3d at 47). FERC therefore had an obligation to consider all reasonably foreseeable direct and indirect environmental effects of authorizing the proposed Project.

  • Reasonable forecasting is sufficient. In response to FERC’s contention that it is impossible to know exactly what quantity of GHG will be emitted as a result of the Project, the court confirmed that “NEPA analysis necessarily involves some ‘reasonable forecasting,’ and that agencies may sometimes need to make educated assumptions about an uncertain future.” Id. at 23 (quoting Del. Riverkeeper Network v. FERC, 753 F.3d 1304, 1310 (D.C. Cir. 2014)). The court pointed out that FERC had estimated the volume of natural gas the Project will transport and suggested that FERC use this number and a DOE report regarding emissions estimates for various types of plants that was cited by FERC in the EIS to estimate the GHG emissions from the power plants that will use the Project’s natural gas. Id. at 24. Although the court acknowledged that quantification may not always be possible, it suggested that FERC must provide a satisfactory explanation regarding why quantification is not feasible. Id. at 25. 
  • FERC must discuss emissions estimates even if they might be offset by reductions elsewhere. The Project EIS found that some of the natural gas transported by the Project will allow Florida utilities to retire coal-fired plants, which will offset emissions produced by the natural gas transported by the Project. The court found that this discussion did not excuse FERC’s failure to address downstream GHG emissions, noting that the regulations implementing NEPA require an EIS to address both the beneficial and detrimental effects of a project, even if on balance the agency believes the project’s effects will be beneficial. 40 C.F.R. § 1508.8.
  • FERC must explain on remand its position on using the social cost of carbon (SC-CO2) to convert downstream emissions estimates to concrete harms. The court addressed but did not rule on whether FERC, in its quantification and consideration of the Project’s downstream emissions, must link those emissions to concrete harms. In its request for rehearing, the Sierra Club asked FERC to convert emissions estimates to concrete harms using the SC-CO2, a tool developed by an interagency working group that attempts to place a dollar value on the long-term harm inflicted by each ton of carbon emitted. FERC did not discuss the SC-CO2 in the EIS, but FERC has historically declined to apply the SC-CO2 for NEPA purposes because it accounts for harms that are not “significant” under NEPA, and several of its components are contested. The court declined to review FERC’s position on the SC-CO2, which FERC did not include in the Project’s current EIS, but requested that on remand FERC explain in the EIS, “as an aid to the relevant decisionmakers,” whether its previously stated position on the SC-CO2 still holds. Id. at 27.

Judge Brown’s Partial Dissent

Circuit Judge Janice Rogers Brown concurred in part but dissented with respect to the majority’s finding that FERC failed to adequately consider the Project’s downstream GHG emissions. Judge Brown asserted that the majority opinion failed to account for the role that Florida’s state agencies play in regulating the downstream power plants that will use the Project’s natural gas. 

Relying on the court’s recent precedent, Judge Brown concluded that FERC had no authority to prevent the downstream GHG emissions and thus no requirement to consider the emissions in its EIS because the Florida Power Plant Siting Board, not FERC, has the sole authority to authorize or prohibit the construction of the power plants in Florida that will use the Project’s natural gas. According to Judge Brown, “when the occurrence of an indirect environmental effect is contingent upon the issuance of a license from a separate agency, the agency under review is not required to address those indirect effects in its NEPA analysis.” Id. at 36. Responding to the dissent, the majority asserted that, even if the authority of Florida’s state agencies over power plant construction excused FERC from considering emissions from new or expanded power plants, it would not excuse FERC from considering emissions from the significant portion of the Project’s capacity that is earmarked for existing power plants. Id. at 21 n.8.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie
Contact
more
less

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.