06 June 2019

Birckhead v. FERC – A FERC Pipeline Win That Could Lead to Future Pipeline Losses

On June 4, 2019, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) offered non-binding advice to the Federal Energy Regulatory Commission (“FERC”) on how it should perform environmental reviews of greenhouse gas (“GHG”) emissions when it considers new natural gas pipeline projects.  While the opinion in Birckhead v. FERC ultimately upheld FERC’s order permitting a new natural gas compressor station near Nashville, Tennessee, the court devoted several pages of dicta on what upstream and downstream GHG emissions data FERC should be gathering to comply with the National Environmental Policy Act (“NEPA”).

NEPA requires FERC to ascertain a pipeline project’s direct and indirect environmental effects that are reasonably foreseeable when it issues a Natural Gas Act (“NGA”) section 7 certificate of public convenience and necessity.  In Birckhead, the court rejected the notion that GHG emissions created by upstream production and downstream combustion were unforeseeable indirect effects because the record was devoid of data that made it so.  It declared itself “troubled” by FERC’s reasoning that it could avoid review on these grounds.  With respect to upstream production information, the court found it “dubious” that the data was unavailable, and was “skeptical” that it was unobtainable by a project’s applicant.  It suggested that FERC should at least attempt to obtain such information in order to fulfill its statutory duties under NEPA.

The court’s data gathering aspirations, however, were insufficient to sink the specific pipeline project before it.  The petitioners, a group of landowners opposed to the compressor station, had not raised the record development issue before the court.  This led the court to conclude that it could not decide whether FERC’s failure to develop the record on GHG emissions was arbitrary and capricious.

While Birckhead does not place any legal obligation on FERC to create a record on GHG emissions in future cases, it would likely constitute reversible error if FERC did not do so in light of the decision.  Landowner and environmentalist groups are eager to challenge FERC pipeline approvals.  And, Birckhead’s dicta provides a roadmap for future litigants to challenge the sufficiency of FERC’s NEPA review process.  Specifically, Birckhead rejects the idea that upstream production data is unknowable.  It also casts off FERC’s position that it need only consider downstream GHG emissions when a project’s entire purpose is to transport gas to specifically-identified locations in which it knows how that the gas will be combusted, the fact pattern in Sierra Club v. FERC, a 2017 D.C. Circuit decision that vacated a NGA section 7 pipeline certificate issued by FERC.  The court also discards FERC’s argument that it can avoid reviewing downstream GHG emissions on grounds that it lacks jurisdiction over combustion, as other governmental actors are their legally relevant cause.  Relying on Sierra Club’s broad reading of NGA section 7’s “public convenience and necessity” authority, the court suggests that FERC has the statutory authority to deny a pipeline project that would be too harmful to the environment.

Birckhead’s roadmap for litigants is not boundless. The decision blunts Sierra Club, which litigants have used to argue that downstream GHG emissions are always a reasonably foreseeable indirect effect of a pipeline project.  By finding this position too extreme, the court recognizes that FERC’s worst-case scenario forecasting, which assumes 100 percent of the transported natural gas will be combusted without displacing existing GHG emissions (a “full-burn” analysis), goes beyond what NEPA requires.  Birckhead instead suggests that NEPA would be satisfied with an investigation of the transported gas’s downstream uses, even if its findings are inconclusive.  If so, Birckhead represents a loss for pipeline challengers seeking more action from FERC on curbing emissions.

In many respects, Birckhead is an opinion in search of a case.  The opinion makes several references to Otsego 2000 v. FERC, a companion case heard the same day as Birckhead that was dismissed for lack of standing without a merits ruling.  The Otsego 2000 petitioners challenged FERC’s refusal to evaluate upstream and downstream GHG emissions under NEPA when it approved a compressor station in New York.  Petitioners also alleged that FERC’s announcement in that case’s order denying rehearing that it would stop performing full-burn analyses as an impermissible policy change.  Birckhead reads like the Otsego 2000 merits opinion that never was.  At oral argument, the court treated the cases as intertwined, interrupting FERC counsel’s presentation in Birckhead to ask questions on Otsego 2000, which led to an unusual post hoc letter filed in the docket to correct the record in both proceedings.  Birckhead then references the Otsego 2000 transcript, along with the letter, as unpersuasive.  While these quirks make Birckhead highly unusual, it does not make it any less important for FERC or pipeline project proponents as they navigate the extensive NGA permitting process.

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