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Future gas pipelines' climate effects remain thorny legal, permitting issue

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Essential Energy Insights - January 2021


Future gas pipelines' climate effects remain thorny legal, permitting issue

Legal interpretations that take a broad view of the Federal Energy Regulatory Commission's powers to consider downstream greenhouse gas emissions of natural gas pipeline projects could drive future denials of pipeline certifications, an attorney representing pipelines said Oct. 15.

Speaking at the Energy Bar Association's Midyear Energy Forum, James Costan, a partner at Dentons who has represented pipelines, made the case that while the Natural Gas Act allows for mitigation of direct environmental impacts of a pipeline, such as by adjusting the route, the same is not the case for downstream greenhouse gas, or GHG, emissions.

"Because the commission has no jurisdiction over [gas] end users, its only recourse if it has any authority or power in this particular area at all would be to deny the pipeline certificate," presumably because of a determination that some global limit on incremental GHG emissions has been met, Costan said. "Once the commission denied the first pipeline certificate, it would be obliged to deny future certificates on the same basis."

Costan spoke on a panel with Matthew Christiansen, legal adviser to FERC Commissioner Richard Glick, in which they laid out competing visions on the reach of FERC's authorities in light of a 2017 ruling by the U.S. Court of Appeals for the District of Columbia Circuit in Sierra Club v. FERC. The decision found that the agency fell short on GHG considerations when it reviewed the Southeast Markets Pipelines or at least needed to provide a better explanation.

Differences over what FERC must do in the aftermath of that decision have split the commission, leading to some delays in gas project decisions and spawning further litigation.

Costan has argued the Sierra Club case was wrongly decided and suggested FERC seek clarity from the courts by spelling out in a certificate order that it lacked the authority to deny a project based on downstream GHG emissions. Such a finding would be a better reading in his view of a Supreme Court holding in Department of Transportation v. Public Citizen that found an agency has no obligation to consider environmental information if it has no statutory authority to act on that information.

In the Sierra Club decision, the D.C. Circuit said that because FERC could deny a pipeline certificate on the grounds that the pipeline would be too harmful to the environment, the agency is a "legally relevant cause" of direct and indirect environmental effects of pipelines it approves. It also found the agency had "legal authority to mitigate" GHG emissions that are an indirect impact of authorizing the pipeline in that case. Legal battles have followed over whether the findings should apply only in narrow circumstances.

Christiansen, in addition to highlighting the Sierra Club findings, said considering GHG impacts is also good policy. In meeting with natural gas companies, he said one issue that inevitably comes up is the benefits that natural gas can provide, including the role it can play in reaching environmental goals. "The argument that we make, though, is that because you have to consider those benefits, you also have to consider the costs," he said.

He disagreed with notions that once FERC starts to consider the GHG emissions, it is "almost an existential threat" to development of future pipeline infrastructure.

Instead, he said GHG emissions should be part of FERC's weighing of benefits of a project and the adverse effects, "though it shouldn't necessarily be determinative." FERC could find a pipeline has significant downstream GHG emissions but could still find the project to be in the public convenience and necessity because of other benefits, including other environmental benefits, he said.

Christiansen spoke of some benefits of natural gas, describing it as a "relatively clean source of electricity" in parts of the country, a relatively clean source of home heating, and as one of the primary fuels being used to aid renewable integration with its fast-ramping capabilities.

Maya Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.