Judges quiz FERC on climate explanations in Rio Grande LNG approval orders

The Federal Energy Regulatory Commission faced questioning from appeals court judges March 23 about whether it adequately explained why it declined to consider the significance of greenhouse gas emissions associated with the Rio Grande LNG project in Brownsville, Texas.

The probing from DC Circuit Court of Appeals judges came during oral argument March 23 on FERC orders approving the 27 million mt/year Rio Grande project and the 4 million mt/year Texas LNG project, as well as the recently scrapped 6 million mt/year Annova LNG project.

The three projects, which would be sited along the Brownsville Ship Channel, were part of a wave of proposed LNG export facilities that cleared the FERC process in 2019 and which had been vying for offtake contracts generally needed to finance construction.

Also drawing scrutiny from the judges was the adequacy of analysis of cumulative impacts for Texas LNG and how FERC assessed environmental justice impacts of the facilities and related ozone emissions.

'Why isn't it cited?'

During the Rio Grande argument, Chief Judge Sri Srinivasan pressed FERC about its decision not to use the social cost of carbon tool to determine whether climate impacts of the project were significant.

At issue was whether FERC did enough to explain why it was not required to use the tool under a White House Council on Environmental Quality regulation, in light of Sierra Club's argument that it should have done so.

"Why isn't it cited in the brief at all, because, especially in the Rio Grande case, ...the entire argument, is rested on the regulation," Srinivasan asked.

Sierra Club Senior Attorney Nathan Matthews had argued that a CEQ rule set a floor establishing that in the absence of other analyses, an agency could not refuse to use a method generally accepted in the scientific community; and he said FERC, in a remand order on the Sabal Trail Transmission project, had conceded that the social cost of carbon was generally accepted.

As to where FERC laid out its reasoning, Robert Kennedy, counsel for FERC, pointed to a case that was cited in the footnote of FERC's rehearing order on Rio Grande. He also highlighted FERC's view that the social cost of carbon is not an accepted tool for use in project-specific analysis.

Judges also explored FERC's findings that the Rio Grande project did not disproportionately affect minority and low-income populations, asking how FERC picked the geographic area and comparison populations to study, in light of Sierra Club's argument that FERC defined the affected community arbitrarily narrowly.

Kennedy said FERC's use of the two-mile radius was consistent with an Environmental Protection Agency guideline suggesting that a wide area could dissipate the impacts. FERC reasoned that because all affected communities included in the zone were environmental justice communities, impacts will not be disproportionately concentrated. In addition, it looked at whether there were factors unique to communities that would amplify the effects.

Regulatory certainty

At one point in the argument, Judge Douglas Ginsburg questioned Rio Grande's counsel, John Longstreth, about the appropriate remedy — vacatur or remand — should the court reverse FERC on orders approving the project.

If FERC were to vacate the certificate, Longstreth replied, "we would no longer have a permit in place and people looking to invest in the project, customers looking to do business with it would be less likely to deal with a project if it didn't have a permit."

Separately, in the Texas LNG case, justices questioned whether there was adequate explanation of combined impacts of projects on ozone pollution, even though that issue was more fully explored in the Rio Grande order.