Sierra Club v. Federal Energy Regulatory Commission

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On March 14, the Federal Energy Regulatory Commission (FERC) issued an order reinstating the certificate of public convenience and necessity for the Southeast Market Pipelines Project. FERC said its quantification of downstream greenhouse gas emissions did not alter its conclusion that the project was an environmentally acceptable action. FERC’s supplemental environmental impact statement concluded that there was no way to determine the significance of the project’s emissions using either the social cost of carbon tool—which FERC said was “not useful in determining whether, and under what conditions, to authorize a proposed natural gas transportation project”—or other methodologies. Two FERC commissioners dissented: one commissioner agreed that the project was in the public interest but said FERC needs to “more squarely address” greenhouse gas emissions and the social cost of carbon; the other dissenting commissioner said that FERC’s order on remand failed to provide a “reasoned answer” to the inquiries required by the D.C. Circuit’s August 2017 decision.

After denying rehearing of its decision ordering additional environmental review of greenhouse gas emissions associated with the Southeast Market Pipelines Project, the D.C. Circuit on March 7 granted FERC’s motion to stay issuance of the mandate. The D.C. Circuit ordered that the mandate be withheld through March 26, 2018. The D.C. Circuit denied the pipeline developer’s motion for a longer stay.

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The petitioners filed a response opposing the motions for stay of issuance of mandate, arguing that there was not good cause to allow FERC and the developers to use a stay “to skirt the vacatur”; the petitioners also argued that the court should not “pre-judge” whether FERC’s additional environmental review complied with the court’s remand order. In addition, the petitioners argued that there would not be irreparable harm to consumers or to the environment and that economic harm to the developers did not justify delaying the mandate.

After the D.C. Circuit denied rehearing of its decision requiring additional environmental review of greenhouse gas emissions associated with the Southeast Market Pipelines Project, the Federal Energy Regulatory Commission (FERC) and the project’s developers filed motions to stay issuance of the mandate. In their motions, which were filed on February 6, 2018, FERC sought a 45-day stay, and the developers sought a 90-day stay. FERC stated that it had issued a final supplemental environmental impact statement on February 5 and that it would issue an order in compliance with the court’s mandate within 45 days. In the meantime, FERC argued, a vacatur order by the court would revoke certificates of public convenience and necessity for pipelines currently providing natural gas to Florida power plants, which could potentially endanger the electricity supply to Florida residents.

The developers’ motion to stay issuance of the mandate asserted that FERC had cured the environmental review deficiencies identified by the court (notwithstanding petitioners’ criticisms of the methodologies used by FERC) and that vacatur would cause significant irreparable economic and environmental harms. The developers further argued that it was appropriate to stay the mandate to avoid irreparable harm during preparation of and disposition of a petition for writ of certiorari and that stay of the mandate was warranted even under the traditional test for stay pending appeal. The developers have also asked FERC to expedite reissuance of certificates authorizing the project or to issue temporary emergency certificates.

The D.C. Circuit Court of Appeals denied petitions for rehearing of its decision vacating the Federal Energy Regulatory Commission’s (FERC’s) authorization of an interstate natural gas pipeline in the southeastern United States. In August 2017, the D.C. Circuit found that FERC’s analysis of the pipeline’s impacts on greenhouse gas emissions was inadequate and required FERC to prepare a new environmental impact statement. FERC and the respondent-intervenors had argued that remand without vacatur would have been the proper remedy.

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In a split opinion, the D.C. Circuit Court of Appeals found that the environmental impact statement (EIS) prepared by the Federal Energy Regulatory Commission (FERC) for the Southeast Market Pipelines Project did not contain enough information on the greenhouse gas emissions that would result from combustion of the gas that the project would carry. When completed, the project—which comprises three interstate natural-gas pipelines in the southeastern United States—would be able to carry one billion cubic feet of natural gas per day. The D.C. Circuit concluded that “at a minimum, FERC should have estimated the amount of power-plant carbon emissions that the pipelines will make possible” because it was reasonably foreseeable that the transported gas would be burned in Florida power plants. The court distinguished its conclusion in earlier cases that FERC had no legal authority to consider the environmental effects of natural gas that would be exported from the liquefied natural gas (LNG) facilities it authorized. The D.C. Circuit said that while FERC was forbidden from relying on the environmental effects of gas exports as a justification for denying an upgrade license for an LNG facility, FERC’s authority over pipelines permitted FERC to deny a pipeline certificate on the ground that it would be too harmful to the environment. The D.C. Circuit also was not persuaded by FERC’s “practical objection” regarding the impossibility of knowing “exactly what quantity of greenhouse gases will be emitted as a result of this project being approved.” The court said FERC should have either made a quantitative estimate of downstream greenhouse gas emissions or “explained more specifically” why it could not do so. The court also indicated that the fact that downstream emissions might be offset by reductions elsewhere (from the retirement of coal-fired plants, for example) did not excuse FERC from making emissions estimates. In response to petitioner Sierra Club’s argument that FERC should use the Social Cost of Carbon to convert emissions estimates to concrete harms, the D.C. Circuit directed FERC to explain in the EIS whether it would adopt the position it took in the EIS for an LNG terminal that the Social Cost of Carbon was not useful for purposes of environmental review under the National Environmental Policy Act. In addition to its holdings regarding FERC’s greenhouse gas emissions analysis, the D.C. Circuit also determined as a threshold matter that the petitioners had standing to challenge all three segments of the pipeline project, not just the segment alleged to have caused an injury-in-fact and upheld other aspects of FERC’s environmental review. Judge Janice Rogers Brown dissented on the issue of downstream emissions, writing that in her view such emissions did not need to be considered because FERC did not control whether the greenhouse gas emissions would occur.

The Federal Energy Regulatory Commission (FERC) defended its approval of natural gas pipeline projects in the southeastern United States. FERC argued that it satisfied the requirements of the National Environmental Policy Act, including by taking a hard look at potential impacts on climate change. FERC said that it had reasonably determined that the projects would not significantly contribute to greenhouse gas cumulative impacts. FERC’s brief noted that power plants receiving gas from the pipeline projects would be using it to convert from burning coal, thereby reducing those plants’ greenhouse gas emissions and potentially offsetting some regional emissions. FERC rejected the contention that it should have quantified downstream effects using a life-cycle analysis, which FERC had concluded would require it to engage in speculation. FERC said its approach to assessing climate change impacts was consistent with Council on Environmental Quality guidance and with D.C. Circuit precedent.

Sierra Club, Flint Riverkeeper, and Chattahoochee Riverkeeper filed their opening brief in their challenge to the Federal Energy Regulatory Commission’s (FERC’s) authorizations for a natural gas pipeline project extending from Alabama to Florida. One of the petitioners’ three primary arguments was that FERC violated the National Environmental Policy Act (NEPA) and acted arbitrarily and capriciously by not considering the reasonably foreseeable indirect downstream environmental effects of the pipeline project, including “the greenhouse gas, health, and climate effects of burning 1.1 billion cubic feet of natural gas per day for several decades” when tools were available and used by other federal agencies exist to measure such impacts.

Three environmental groups challenging a natural gas pipeline from Alabama to Florida asked the D.C. Circuit Court of Appeals to expedite consideration of their petition for review. The petitioners said they wished to obtain a ruling on the merits prior to the scheduled May 2017 completion date for the pipeline in the event that the D.C. Circuit did not grant a stay. The petitioners also said that they would still request an expedited schedule if a stay were granted to minimize harm to the other parties. The groups argued that the Federal Energy Regulatory Commission's (FERC’s) determinations were subject to “substantial challenge” and appropriate for expedited review because of FERC’s failure to consider downstream environmental impacts, including greenhouse gas emissions. The groups said FERC’s review was at odds with EPA and Council on Environmental Quality guidance, caselaw, and the NEPA regulations.