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FERC climate policy on gas projects stands after court drops case based on standing

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Several states, other parties had been unhappy with FERC's move

Otsego 2000 found to not have 'organizational standing'

Washington — A federal court dismissed a widely supported challenge to the US Federal Energy Regulatory Commission's decision to limit its analysis of greenhouse gas emissions tied to natural gas infrastructure projects.

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The court did not address the merits of the challenge, but found the challenger failed to demonstrate legal standing.

Related legal debate over FERC's GHG considerations could still be tackled in other pending cases before the court.

In the Thursday judgment, the US Court of Appeals for the District of Columbia Circuit dismissed a petition for review of a May 2018 FERC order over the lack of standing of the core petitioner, New York environmental and historic conservation group Otsego 2000.

The group's petition had been backed by several states and other parties unhappy with FERC's move, which they said tightened the scope of the commission's climate impact analysis for pipelines and LNG terminals under the National Environmental Policy Act. Republican members of the commission and gas industry observers had said the policy was a return to the agency's traditional approach.

The DC Circuit said Otsego 2000's standing depended on whether it had "organizational standing," and the court found that it did not. "Otsego's affidavits do not identify any injury other than the organization's expenditure of time and money related to this litigation," the DC Circuit said, pointing to precedent in a 2015 ruling in another case.

Under Article III of the US Constitution, designed to limit the power of federal courts, the courts may only make a decision on a lawsuit if the petitioner has standing, which is a sufficient connection to a case to justify participation.

Otsego 2000 took its case to the DC Circuit after FERC turned down the group's request that the commission reconsider a 2016 approval of Dominion Energy's 112,000 Dt/d New Market pipeline expansion project in New York. In the May 2018 order rejecting the request for rehearing, the FERC majority said the commission will limit its reviews of the potential environmental effects of gas infrastructure projects, including GHGs, to impacts that can be linked directly to the projects, except in limited circumstances. It would not consider impacts in gas production zones or market areas that are harder to track. For a short time, it argued FERC went what beyond was legally required and offered information that was generic and inherently speculative, providing upper bound or worst-case scenario estimates.

In December 2018, the attorneys general for six states -- New York, Maryland, Massachusetts, New Jersey, Oregon and Washington -- and the District of Columbia joined Otsego 2000's challenge in the DC Circuit. They told the court that, as a dissenting FERC commissioner had said, climate change is an "existential threat" to the states and their citizens. They wrote that FERC had used an order on rehearing in an individual pipeline case to announce "a new policy to curtail its [National Environmental Policy Act] evaluation of greenhouse gas emissions from the vast majority of natural gas infrastructure projects under its jurisdiction."

In oral argument in April, DC Circuit judges appeared to be interested in why FERC had not tried to get more information from the pipeline developer and its customers on the end use of natural gas and GHGs. But they also questioned Otsego 2000's standing (U.S. Appeals Court for the DC Circuit docket 18-1188).

ClearView Energy Partners, in a research note, said the court "may still render judgment on the commission's narrower approach to GHGs in a different case argued the same day (Lori Birckhead, et al. v. FERC) challenging the certificate for Tennessee Gas' Broad Run expansion." It might grant that appeal based on upstream emissions, rather than downstream emissions, it said.

FERC's win in the Otsego case "would not preclude another party from challenging the approach in future cases," although it could make it harder, according to ClearView.

-- Sean Sullivan, S&P Global Market Intelligence

-- Maya Weber, newsdesk@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com