Healthy Gulf v. Federal Energy Regulatory Commission

The D.C. Circuit Court of Appeals found that the Federal Energy Regulatory Commission (FERC) did not adequately explain its failure to determine the environmental significance of the greenhouse gas emissions of planned liquefied natural gas (LNG) facilities in southwestern Louisiana. The court also found that FERC did not adequately assess cumulative effects of the project’s nitrogen dioxide emissions but rejected the argument that FERC failed to sufficiently consider alternatives, including an alternative that mandated use of carbon capture and sequestration. Regarding greenhouse gas emissions, the D.C. Circuit concluded that FERC provided sufficient rationales for declining to use the social cost of carbon or a significance threshold in a February 2022 interim policy statement to determine significance. The D.C. Circuit found, however, that FERC did not explain its departure from an approach to significance that it took in an earlier proceeding in which it evaluated how much a project would increase national greenhouse gas emissions. The court found that FERC’s failure to acknowledge the petitioners’ argument on this point or to explain why it did not adopt the approach was “a straightforward violation of the [Administrative Procedure Act’s] reasoned decision-making requirements.” The court acknowledged that in an earlier decision it had held that the National Environmental Policy Act (NEPA) and its regulations did not require agencies to “formally label” a project’s greenhouse gas emissions as significant or not significant, but the court said this earlier holding did not affect this case because in the orders under review FERC “did not dispute the premise that it must make a significance determination absent a sufficient explanation for not doing so in a particular proceeding.” Because of the insufficiencies in the NEPA analysis, the D.C. Circuit also found that FERC must reevaluate its public interest determination under the Natural Gas Act, but the court did not vacate FERC’s order authorizing the project.