Due to the increase in shale production and a consequential decrease in natural gas prices, demand for natural gas has increased. To satisfy that demand, pipeline companies are building new infrastructure to link production sources to more consumers around the country. The Federal Energy Regulatory Commission ("FERC") reviews applications for the construction and operation of interstate natural gas pipelines pursuant to the Natural Gas Act ("NGA") and the National Environmental Policy Act ("NEPA"). FERC's orders, which either grant or deny the issuance of a certificate of public convenience and necessity ("CPCN") after completing a public interest review, are subject to judicial review.
In discharging their obligation under NEPA to consider a proposed pipeline's "reasonably foreseeable" indirect effects on the environment as part of its review, FERC commissioners have been divided along party lines as to whether (and how) a proposed project's climate change impact should be considered in pipeline certificate proceedings. While Democratic commissioners advocate including climate change impacts in CPCN proceedings, Republican commissioners tend to restrict consideration of climate change impacts. Recently, FERC has issued a number of Republican-leaning certificate orders, to which Democratic Commissioner Richard Glick and, in some cases, Democratic Commissioner Cheryl LaFleur (who is often a swing voter on the now four-person Commission), have issued dissenting opinions.
Indeed, Commissioner Glick has been outspoken in his disagreement with the position taken by his Republican colleagues. Commissioner Glick argues that it is within the public interest to consider the climate impacts of projects due to the existential threat of climate change and contends that the holding of Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017), obligates FERC to consider the impact that new pipelines will have on GHG emissions from upstream production and downstream consumption of gas. The Democratic commissioners assert these emissions are cumulative or indirect impacts of a new project, and thus that NEPA requires that GHG emissions be examined in new pipeline application reviews.
Republican commissioners, on the other hand, argue that FERC does not have the authority to consider climate impacts in permitting decisions. They posit that the Sierra Club holding applies only to a narrow set of cases where FERC has definitive information about the specific location and timing of upstream production and downstream consumption, and only in those cases may they conclude that GHG emissions from these activities are reasonably foreseeable.
The split among FERC commissioners is now before the courts, as a number of FERC's pipeline certificate decisions are under district court review. In addition, the D.C. Circuit recently agreed with the position advocated by Democratic commissioners that FERC has the statutory authority to consider the environmental effects of the projects it approves due to its obligation under the NGA to consider "public convenience and necessity." Birckhead v. FERC, 925 F.3d 510 (D.C. Cir. 2019). In Birckhead, although the D.C. Circuit rejected FERC's position that downstream emissions were not reasonably foreseeable because gas associated with the project might displace higher-emission fuels or otherwise offset emissions, it ultimately agreed with FERC's conclusion that the record did not provide evidence to establish the necessary causal relationship between the project and upstream gas production.
Ultimately, until there is consensus at the district court level or action by the Supreme Court, it is likely the internal dispute within FERC will continue, as climate change remains a polarizing political issue.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.