Once again, the Federal Energy Regulatory Commission’s (“FERC” or “Commission”) Environmental Assessment (“EA”) analysis of the downstream effect of greenhouse gas (“GHG “) associated with interstate gas pipelines and liquefied natural gas terminals is certified pursuant to the legally insufficient Natural Gas Act (“NGA”), on March 11, 2022, the United States Court of Appeals for the District Circuit of Columbia issued a reference directing FERC to consider the reasonably foreseeable indirect effects of the combustion of natural gas as a result of a proposed pipeline expansion. The court ordered FERC to review these indirect downstream impacts on the referral and prepare a compliant EA, but declined to rescind FERC’s orders. Food & Water Watch and Berkshire Environmental Action Team v. FERC, No. 20-1132 (March 11, 2022) (“Watch out for food and water”). Food and water monitoring, written by Chief Justice Srinivasan and joined by Justices Millett and Katsas, appears to provide additional support for some of the reasoning provided by the majority in FERC’s two recent policy statements regarding natural gas certificates.
In Watch out for food and water, the petitioners challenged FERC’s decision under section 7(c) of the NGA authorizing the Tennessee Gas Pipeline Company (“Tennessee”), a FERC-regulated interstate gas pipeline, to construct a 2.1 miles and to replace two less efficient compressors. with a new compressor in Agawam, Massachusetts to increase pipeline capacity in western Massachusetts to meet local distribution demand. FERC conducted an EA and concluded that with appropriate mitigation, the project would not constitute a major federal action significantly affecting the environment and issued a certificate order approving the project. Then-commissioner Glick (now chair) filed a partial dissent regarding GHG impacts.
In the Certificate Order, FERC determined that the upstream and downstream environmental impacts associated with the Tennessee Project were not reasonably foreseeable. In its request for a rehearing before FERC, Food & Water Watch did not identify any particular flaws in FERC’s consideration of upstream effects or argue that FERC’s analysis of upstream impacts based on the location and number of wellheads resulting from the project was misplaced. Noting this failure, the tribunal, although “troubled”, concluded that the petitioner had not exhausted his administrative remedies and that, therefore, the tribunal had no jurisdiction to examine the upstream impacts. Notice at 12-13.
On the other hand, the court ruled on the merits of the claimants’ argument concerning the GHG emissions downstream of the project. The court disagreed with FERC’s explanation that downstream gas consumption and associated GHG emissions were not reasonably predictable. Although FERC argued that the petitioners also failed to properly raise the downstream impacts argument at the rehearing, the court found that the petitioners’ motion for rehearing met the standard of exhaustion of administrative remedies by citing both the court precedent and the dissent of then-Commissioner Glick which made the same argument. regarding the predictability of downstream GHG impacts. Accordingly, the court found that the petitioner had properly alerted FERC to the legal argument he had made during the review. The court observed that “[o]Our precedents establish that downstream emissions are not “as a categorical matter, always a reasonably foreseeable indirect effect of a pipeline project”. … On the contrary, predictability depends on information on the “destination and use of the gas in question”.
The court analyzed the argument regarding downstream emissions in light of the court’s 2019 precedent on the issue, in Birckhead v. FERC, 925 F.3d 510 (DC Cir. 2019) (“birch head”), and its 2017 decision in Sierra Club v. FERC, 867 F.3d 1357 (DC Cir. 2017) (“Sabal Trail”). In birch head the court upheld FERC’s decision that it could not measure downstream GHG impacts because the record only showed that “gas [was] headed somewhere in the Southeast,” and therefore ruled that FERC had not acted unreasonably in refusing to assess downstream impacts. On the other hand, the Sabal Trail The opinion concluded that the record clearly indicated that the gas to be transported was intended for combustion in power plants and that the downstream emissions were a reasonably foreseeable indirect effect of the pipeline project. Notice at 3-4 p.m.
In Watch out for food and waterthe court found that the Tennessee project record and FERC’s analysis more closely resembled the situation in Sabal Trail than birch head. The court therefore concluded, consistent with then-Commissioner Glick’s dissent, that FERC knew where the gas to be transported by the Tennessee project was going and how it would be used. In light of this decision, the court found that FERC failed to explain its conclusion that the location and usage information in the record was too “generalized” and that, therefore, the broadcasts in downstream were reasonably foreseeable. Identifier.
The court rejected each of FERC’s attempts to explain its decision and to distinguish Sabal Trail and birch head, judging the arguments unconvincing. First, FERC argued that the utilization profiles of generating stations and local distribution company customers were different. The court ruled that FERC’s reliance on its own Energy Primer to support its position without more was insufficient evidence that “a difference in predictability arises from the distinction between end uses.” ID. 17. Second, FERC submitted that when gas is destined for local distribution, it is difficult to determine whether increased capacity will result in increased consumption due to potential offsetting reductions. The court rejected this argument based on birch head, ruling that the end use is reasonably foreseeable and FERC “is not relying on anything more than a mere possibility of offsetting the reductions”. ID. at 18. Accordingly, the court directed FERC to conduct a supplemental EA “in which it must either quantify and account for carbon emissions downstream of the project, or explain in more detail why it cannot do so.” make”. Identifier.
The court rejected the plaintiffs’ additional arguments for non-exhaustion of administrative remedies, including their challenge to the EA’s finding that FERC could not determine “the significance of emissions directly related to the project” and the FERC’s assertion that “there is no universally accepted methodology for attributing discrete, quantifiable physical effects on the environment. Similarly, the court did not address the argument that FERC erred by failing to consider the social cost of carbon as a means of assessing the significance of GHG impacts. The tribunal further found that FERC acted reasonably in separately assessing the environmental impacts of the subject project and a nearby meter upgrade project. Identifier. at 18-21.
Finally, the court refused to set aside the certificate orders. The court found that after properly accounting for foreseeable downstream GHG emissions, it is possible that FERC could still issue a finding of no significant impact and not require the preparation of an environmental impact statement. . Additionally, the court explained that because the Tennessee project is either under construction or operational, canceling the orders would be “quite disruptive.” Identifier. at 24 citing the city of Oberlin, Ohio v. FERC, 937 F.3d 599, 611 (DC Cir. 2019).
It’s not clear how Watch out for food and water will affect the future of recent FERC policy statements regarding certificates for natural gas infrastructure under FERC jurisdiction. The decision could make it harder for entities harmed by these policy statements to convince the majority of FERC to change direction. The majority of FERC who voted in favor of these policy statements did so, in part, based on the view that the policy statements would make future certificate orders “more durable”, i.e. ie less likely to be overturned on appeal. The FERC majority specifically pointed to court decisions such as Sabal Trail and birch head as examples of the legal risk posed by the agency’s failure to consider downstream GHG impacts in its environmental assessments, at a minimum, and as evidence that the Commission needs to further quantify the impact of emissions associated with projects interstate pipelines. Watch out for food and water does nothing to allay these concerns and may even exacerbate the concerns expressed by the majority of FERC.
After a grilling of Congress by the Senate Energy and Natural Resources Committee and criticism from Interstate Pipelines over the scope of its new policies, this new court ruling may tend to harden the majority’s stance on statements of rather than favoring revised policy statements or compromises that might allay the concerns of critics of the policy statements.
As for the FERC commissioners who disagreed with the policy statements, it is possible that they read Watch out for food and water differently from the majority of FERC. Although the court squarely addressed the issue of whether downstream emissions are “reasonably foreseeable”, the court did not address the preliminary issue of whether FERC’s decision to certify the natural gas infrastructure is the legally relevant “cause” of downstream emissions. The commissioners appear to be split on whether the agency should, or even can, analyze downstream shows for which FERC’s certificate decision is not the legally relevant cause. As Watch out for food and water does not address this issue, this latest court ruling may not remedy this division among the commissioners.