Southeast Market Pipelines Project Certificate Vacated and Remanded to FERC for Further Environmental Review on Greenhouse Gas Emissions

In a 2-1 decision that issued today, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in Sierra Club et. al v. Federal Energy Regulatory Commission (Sierra Club) vacated and remanded a Natural Gas Act (NGA) Section 7 certificate of public convenience and necessity granted by the Federal Energy Regulatory Commission (FERC) to the Southeast Market Pipelines Project (Project) in 2016.  The Project comprises three natural gas pipelines currently under construction in Alabama, Georgia, and Florida that, once built, will transport over 1 billion cubic feet of natural gas per day over 500 miles to feed new and existing natural gas-fired electric plants in Florida and to serve the growing natural gas demand of Florida utility customers.  The grounds for vacatur and remand was FERC’s failure under the National Environmental Policy Act (NEPA) to adequately discuss the downstream effects of carbon emissions from natural gas transported through the pipelines in the Project’s environmental impact statement (EIS).  The court determined that downstream greenhouse gas emissions constituted a reasonably foreseeable indirect effect of authorizing the Project, and which FERC had legal authority to mitigate.  The court concluded that, at a minimum, FERC should have estimated the amount of power-plant carbon emissions that the pipelines would make possible as an indirect effect of the Project.  It directed FERC to re-do the Project’s EIS in order to provide a quantitative estimate of the downstream greenhouse gas emissions that will result from burning natural gas to be transported by the pipelines or explain more fully why it could not do so.  It also directed the EIS to explain FERC’s position on the Social Cost of Carbon, a tool developed by an interagency working group that attempts to value in dollars the long-term harm done by each ton of carbon emitted.

Sierra Club marks the first successful NEPA challenge to a FERC-issued NGA Section 7 certificate since the D.C. Circuit’s 2014 decision in Delaware Riverkeeper Network, Inc. v. FERC, 753 F.3d 1304 (2014).   The decision follows a string of recent unsuccessful attempts by the Sierra Club and others to stymie fossil fuel development through NEPA challenges to natural gas infrastructure.  See e.g., Sierra Club v. FERC (Freeport), 827 F.3d 36 (D.C. Cir. 2016); Sierra Club v. FERC (Sabine Pass), 827 F.3d 59 (D.C. Cir. 2016); EarthReports, Inc. v. FERC, 828 F.3d 949 (D.C. Cir. 2016).  The court distinguished Sierra Club from these other proceedings, each of which concerned the export of liquefied natural gas (LNG) from terminals approved by FERC, on grounds that FERC had no statutory authority to consider the indirect effects of LNG exports under the authority delegated to it.  Instead, the only agency with statutory authority to act on that information was the Department of Energy (DOE).  In contrast, the court determined that NGA Section 7 gave FERC the statutory authority to deny a pipeline certificate on grounds that it would be too harmful to the environment, making FERC the “legally relevant cause” of the direct and indirect environmental effects of the pipeline.  Judge Brown, dissenting, argued that there is no difference between DOE’s role in limiting FERC’s ability to regulate emissions from LNG exports from the role of Florida state regulators with oversight of power plant emissions.  Judge Brown countered that FERC was not the legally relevant cause of the emissions, and thus had no NEPA obligation to assess their downstream impacts.

The court provides a simple path for FERC to follow on remand with guidance on how to approach the emissions calculation in an updated EIS.  However, the remand still presents the first court-mandated test for FERC’s newest commissioners to consider and address greenhouse gas emissions and climate change.  Former Chairman Norman Bay raised the impact of greenhouse gas emissions, and suggested that FERC should pay them greater consideration in NGA Section 7 certificate proceedings, immediately prior to his February 3, 2017 departure from the agency.