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DC Circuit upholds US FERC orders in GHG case, offers 'misgivings' on NEPA effort

Highlights

FERC must 'at least attempt' to gain information: court

FERC jurisdictional argument rejected

Glick sees ruling affirming obligation to weigh impacts

Washington — The US Court of Appeals for the District of Columbia Circuit Tuesday upheld on procedural grounds Federal Energy Regulatory Commission orders in a case testing the agency's greenhouse gas considerations in natural gas pipeline reviews, but the court expressed "misgivings" about FERC's "less-than-dogged" efforts to obtain information for its National Environmental Policy Act review.

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In Lori Birckhead, et al., v. FERC, a three-judge panel concluded it lacked jurisdiction to rule based on those misgivings. The petitioners failed to raise questions at the appropriate time about the effort to seek information needed, the court said.

FERC's approach to weighing indirect GHG emissions associated with gas projects has divided commissioners, adding uncertainty about FERC's ability to issue the certificate orders that projects need to advance.

At issue in the case was Tennessee Gas Pipeline's Broad Run Expansion Project, which would add 200,000 Dt/d of capacity for moving Appalachian shale gas to southeastern US markets. The petitioners questioned whether FERC's orders ran counter to the court's findings in Sierra Club v. FERC, a case involving the Sabal Trail Transmission pipeline, by failing to consider upstream and downstream GHG emissions.

The court denied the petition.

It was dubious about FERC's assertions about why it did not seek out more information from project developers on end uses of the gas or locations of the upstream origins of the gas.

"It should go without saying that NEPA also requires the commission to at least attempt to obtain the information necessary to fulfill its statutory responsibilities," the court said.

The court also rejected the line of reasoning from FERC that it need not consider downstream GHG emissions if the agency cannot be considered a legally relevant cause.

"[T]his line of reasoning gets the commission nowhere," the court said, since FERC has such authority in the context of pipeline certification. "Because the commission may ... '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' -- even where it lacks jurisdiction over the producer or distributor of the gas transported by the pipeline," it said.

GLICK WELCOMES RULING

Commissioner Richard Glick, who has dissented in gas project cases, said the ruling "unambiguously affirms FERC's obligation under NEPA and the [Natural Gas Act] to consider the reasonably foreseeable upstream and downstream GHG emissions caused by an interstate natural gas pipeline."

"Although the court denies the petition on procedural grounds, the opinion puts to bed any suggestion that NEPA and the NGA do not permit FERC to seriously consider the GHG emissions caused by a pipeline," Glick said.

As to downstream emissions in this case, the court found that "neither side has it exactly right" in applying the court's prior Sierra Club finding that FERC had not done enough to consider downstream emissions from power plants served by Sabal Trail Transmission and two related projects.

FERC is wrong to suggest downstream emissions are not reasonably foreseeable simply because the gas transmitted may displace existing supplies or higher-emitting fuels, the court said. And FERC too narrowly construed Sierra Club to apply when a project's entire purpose is to ship gas to specifically identified destinations, it added.

But petitioners go too far in claiming downstream combustion is always a reasonably foreseeable indirect effect of a pipeline, the court said.

MORE DATA REQUESTS

Gary Kruse of LawIQ called the decision "a definite rebuke of the current majority position" at FERC. The opinion offers a strong hint that NEPA requires FERC to ask applicants about the downstream use of the gas, he said. In addition, if the applicant provides an answer, there is a strong hint that there is no legal reason why that would not be an indirect impact, and FERC must determine this on a factual basis considering the particulars in the case, he said.

Howard Nelson, attorney and DC shareholder at Greenberg Traurig, said the ruling may not change the commission's policy other than to prompt FERC to ask more questions about where the gas is going and make a good-faith effort to ascertain that. The answers may be clearer if the shipper is an electric power plant versus a producer selling gas into the spot market or local distribution company, he suggested.

As for upstream emissions, the court found petitioners did not adequately counter FERC's argument that unless a pipeline project is the only way to get gas to market, there is not a reasonably close causal relationship to the indirect impacts.

The petitioners offered no record evidence that would help FERC predict the number and location of added wells, and offered no evidence that the producer, Antero, would not extract the gas in absence of the project, the court said.

-- Maya Weber, maya.weber@spglobal.com

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