On July 19, 2017, the U.S. House of Representatives passed a pair of bills aimed at reforming natural gas and oil pipeline permitting, and granting additional authority to the Federal Energy Regulatory Commission (“FERC”). Both bills passed on largely party-line votes. The two bills are H.R. 2883, Promoting Cross-Border Energy Infrastructure Act, and H.R. 2910, Promoting Interagency Coordination for Review of Natural Gas Pipelines Act. H.R. 2883, removes the current requirement that gas and oil pipelines, as well as electric transmission projects, obtain a Presidential Permit to cross an international border. Instead, pipelines would obtain a certificate of crossing from FERC and transmission projects would obtain such a certificate from the Department of Energy. If enacted into law, this change would mark a significant change for oil pipeline projects. FERC currently has no authority over any aspect of interstate oil pipeline siting. Currently, all siting decisions not on federal lands are handled at the state level, with international border crossings overseen by the State Department through the presidential permit process. FERC does, however, oversee the siting of interstate natural gas pipelines, including Presidential Permits for international border crossings, under current law.
This week’s enforcement update covers:
- CFTC enters into non-prosecution agreements with former Citigroup Global Markets Inc. traders in spoofing case;
- CFTC orders $5.2 million in civil penalties for wash sales designed to generate exchange rebate fees;
- FERC hosts technical conference on developments in natural gas index liquidity and transparency;
- Senate Energy & Natural Resources Committee releases new energy bill;
- President Trump announces intent to nominate Richard Glick as FERC Commissioner;
- FERC Enforcement and City Power file status report on settlement; and
- Judge grants Kraft Foods motion to compel discovery from the CFTC.
On June 28, 2016, the U.S. Court of Appeals for the District of Columbia Circuit issued a pair of decisions upholding the Federal Energy Regulatory Commission’s (FERC) treatment of indirect and cumulative effects of greenhouse gas (GHG) emissions under the National Environmental Policy Act (NEPA) when the agency approved the construction and operation of enhanced liquid natural gas terminals at sites in Louisiana and Texas. These cases provide direct insight into the treatment of GHG emissions in NEPA analyses and are arguably more limited than Revised Draft Guidance issued in 2014 by the Council on Environmental Quality (CEQ). As explained in a previous Sidley Update, CEQ’s revised draft guidance would conceivably expand the scope of NEPA analyses of GHG emissions beyond what is permitted by NEPA or by CEQ’s implementing regulations in several key respects. In particular, CEQ’s arguably broad inclusion of upstream and downstream emissions associated with the extraction and ultimate combustion of fossil fuels is inconsistent with CEQ’s regulations and with well-established judicial precedent that a closer causal connection between an agency action and alleged environmental impacts. In contrast, the D.C. Circuit’s decisions are consistent with prior case law and provide further reason for CEQ to issue final guidance that clarifies the limits on an agency’s ability to evaluate upstream and downstream emissions when conducting a NEPA analysis.
In each case, the court rejected claims by the Sierra Club that NEPA obligated FERC to study the alleged impacts of extracting and processing additional gas that might be produced to satisfy additional international demand arising from greater export capacity. Also, the court rejected Sierra Club’s assertion that FERC should have included, as part of its cumulative effects analysis, a nationwide study of existing or proposed liquid natural gas export terminals. These rulings are important because they provide a further delineation for when so-called upstream and downstream effects can be excluded from analysis as indirect or cumulative impacts in a NEPA study, especially in the energy field.