Court says FERC pipeline review fell short on GHG emissions analysis

The U.S. Court of Appeals for the District of Columbia Circuit on Aug. 22 said that the Federal Energy Regulatory Commission's environmental assessment of a set of new natural gas pipelines in the southeastern part of the country fell short because the assessment "did not contain enough information on the greenhouse-gas emissions that will result from burning the gas that the pipelines will carry."

At issue is the Southeast Market Pipelines Project, which comprises three natural-gas pipelines now under construction in Alabama, Georgia, and Florida.

The linchpin of the project is the Sabal Trail pipeline, which will work its way from Tallapoosa County in eastern Alabama, across southwestern Georgia, and down to Osceola County, Florida, just south of Orlando.

Sabal Trail will connect the other two portions of the project. The first, the Hillabee Expansion, will boost the capacity of an existing pipeline in Alabama, which will feed gas to Sabal Trail's upstream end for transport to Florida. At the downstream end of Sabal Trail will be the Florida Southeast Connection, which will link to a power plant in Martin County, Florida, 120 miles away. Shorter spurs will join Sabal Trail to other proposed and existing power plants and pipeline networks.

By its scheduled completion in 2021, the project will be able to carry over one billion cubic feet of natural gas per day.

Project aims to serve Florida's growing demand for natural gas

In its decision, the appeals court noted that while the three segments of the project have different owners, they share a common purpose, namely to serve Florida's growing demand for natural gas and the electric power that natural gas can generate.

Currently, only two major natural-gas pipelines serve the state, and both are almost at capacity, the court said. Two major investor-owned utilities, Florida Power & Light and Duke Energy Florida, have already committed to buying nearly all the gas the project will be able to transport. FP&L "claims that without this new project, its gas needs will begin to exceed its supply this year. But the project's developers also indicate that the increased transport of natural gas will make it possible for utilities to retire older, dirtier coal-fired power plants," the court said in its opinion.

"Despite these optimistic predictions, the project has drawn opposition from several quarters," the appeals court went on to say. Environmental groups "fear that increased burning of natural gas will hasten climate change and its potentially catastrophic consequences. Landowners in the pipelines' path object to the seizure of their property by eminent domain. And communities on the project's route are concerned that pipeline facilities will be built in low-income and predominantly minority areas already overburdened by industrial polluters."

The role of the Natural Gas Act

Section 7 of the Natural Gas Act places these disputes into the bailiwick of FERC, which has jurisdiction to approve or deny the construction of interstate natural gas pipelines.

FERC launched an environmental review of the proposed project in the fall of 2013. The agency understood that it would need to prepare an environmental impact statement, or EIS, before approving the project, as required by the National Environmental Policy Act of 1969 (NEPA), the court noted.

FERC solicited public comment and held 13 public meetings on the project's environmental effects, and made limited modifications to the project plan in response to public concerns, before releasing a draft impact statement in September 2015 and a final impact statement in December 2015. In the meantime, the pipeline developers formally applied for their Section 7 certificates in September and November 2014.

In February 2016, FERC issued an order that granted the requested Section 7 certificates and approved construction of all three project segments, subject to compliance with various conditions not at issue before the appeals court.

Several parties, including three environmental groups (Sierra Club, Flint Riverkeeper, and Chattahoochee Riverkeeper) subsequently sought rehearing of the order and a stay of construction. FERC agreed to consider the arguments put forth by the parties that sought rehearing, but declined to order a project stay. Construction on the pipelines began in August 2016 and on Sept. 7, 2016, FERC issued a rehearing order, denying rehearing and declining to rescind the pipelines' certificates.

In response, the environmental groups and the landowners asked the appeals court to review of the FERC's certificate and rehearing orders. Among other things, the environmental groups argued that FERC's environmental impact statement failed to adequately consider the project's contribution to greenhouse-gas emissions and its impact on low-income and minority communities.

The landowner and environmental group petitions were consolidated before the appeals court.

FERC's EIS and "reasonably foreseeable" indirect effects

FERC prepared a single unified EIS for the project's three pipelines and no party challenged that approach, the court noted. "Thus, for purposes of our NEPA analysis, we will consider the project as a whole," it said.

The court said that all of the natural gas that will travel through the pipelines "will be going somewhere: specifically, to power plants in Florida, some of which already exist, others of which are in the planning stages. Those power plants will burn the gas, generating both electricity and carbon dioxide. And once in the atmosphere, that carbon dioxide will add to the greenhouse effect, which the EIS describes as 'the primary contributing factor' in global climate change."

In its opinion, the court said that a question before it "is whether, and to what extent, the EIS for this pipeline project needed to discuss these 'downstream' effects of the pipelines and their cargo. We conclude that at a minimum, FERC should have estimated the amount of power-plant carbon emissions that the pipelines will make possible."

The court said that an agency conducting a NEPA review must consider not only the direct effects, but also the indirect environmental effects, of the project under consideration. It said that "indirect effects" are those that are caused by a project and are later in time or farther removed in distance, but are still reasonably foreseeable.

"The phrase 'reasonably foreseeable' is the key here. Effects are reasonably foreseeable if they are 'sufficiently likely to occur that a person of ordinary prudence would take [them] into account in reaching a decision,'" the court went on to say in its opinion.

The court said that one of the "reasonably foreseeable" effects of authorizing a pipeline that will transport natural gas to Florida power plants is that that gas will be burned in those power plants. "This is not just 'reasonably foreseeable,' it is the project's entire purpose, as the pipeline developers themselves explain," the court pointed out.

"It is just as foreseeable, and FERC does not dispute, that burning natural gas will release into the atmosphere the sorts of carbon compounds that contribute to climate change," the opinion said.

The pipeline developers denied that FERC would be the legally relevant cause of any power plant carbon emissions, and thus argued that FERC had no obligation to consider those emissions in its NEPA analysis.

The court concluded that the EIS for the Southeast Market Pipelines Project should have either given a quantitative estimate of the downstream greenhouse emissions that will result from burning the natural gas that the pipelines will transport or explained more specifically why it could not have done so.

"As we have noted, greenhouse-gas emissions are an indirect effect of authorizing this project, which FERC could reasonably foresee, and which the agency has legal authority to mitigate," the court said.

Quantification would allow FERC to compare the emissions from this project to emissions from other projects, to total emissions from the state or the region, or to regional or national emissions-control goals, the court pointed out.

"We do not hold that quantification of greenhouse-gas emissions is required every time those emissions are an indirect effect of an agency action. We understand that in some cases quantification may not be feasible," the opinion said. "But FERC has not provided a satisfactory explanation for why this is such a case."

The court said that FERC is not excused from making emissions estimates just because the emissions in question might be partially offset by reductions elsewhere. "We thus do not agree that the EIS was absolved from estimating carbon emissions by the fact that some of the new pipelines' transport capacity will make it possible for utilities to retire dirtier, coal-fired plants," it said.

"The effects an EIS is required to cover 'include those resulting from actions which may have both beneficial and detrimental effects, even if on balance the agency believes that the effect will be beneficial.' In other words, when an agency thinks the good consequences of a project will outweigh the bad, the agency still needs to discuss both the good and the bad. In any case, the EIS itself acknowledges that only 'portions' of the pipelines' capacity will be employed to reduce coal consumption," the court said.

An agency decisionmaker reviewing this EIS "would thus have no way of knowing whether total emissions, on net, will be reduced or increased by this project, or what the degree of reduction or increase will be. In this respect, then, the EIS fails to fulfill its primary purpose," the opinion went on to say.

The court vacated and remanded the pipeline certificates to FERC on the issue of downstream GHG emissions.

Judge offers partial dissent

Judge Janice Rogers Brown offered a concurrence in part and dissent in part tied to the court's decision. "I join today's opinion on all issues save the court's decision to vacate and remand the pipeline certificates on the issue of downstream greenhouse emissions," wrote Brown.

Among other things, the opinion "completely omits any discussion of the role Florida's state agencies play in the construction and expansion of power plants within the state — a question that should be dispositive," Brown said.

"Because the court's holding is legally incorrect and contravenes our duty to examine all arguments presented, I respectfully dissent," she wrote.