D.C. Circuit Decision Underscores Jurisdictional Limits of FERC Project Reviews Under NEPA
On January 7, 2025, the U.S. Court of Appeals for the D.C. Circuit issued a decision—Citizens Action Coalition of Indiana, Inc. v. Federal Energy Regulatory Commission, 125 F.4th 229 (2025) ("Citizens Action")—affirming limitations on the weight the U.S. Federal Energy Regulatory Commission ("FERC" or "Commission") can accord to downstream environmental impacts in natural gas pipeline certificate proceedings. Under review was FERC's approval of Texas Gas Transmission, LLC's ("Texas Gas") proposal to construct and operate 24 miles of pipeline for the purpose of supplying natural gas to two new CenterPoint Energy ("CenterPoint") natural gas turbines at its A.B. Brown generation site in Southwestern Indiana. CenterPoint planned to replace aging coal plants with a mix of solar and wind, as well as the two new natural gas turbines to ensure the reliability of the project given the intermittency of the primary generation sources. But it was only Texas Gas's pipeline proposal, not CenterPoint's new generation, that was before the Commission.
FERC approved the pipeline over concerns about environmental impacts from the downstream gas turbines and refused to apply the National Environmental Policy Act ("NEPA")'s "reasonable alternatives" analysis expansively to mandate consideration of "non-gas" alternatives to the new generation. The court agreed with FERC's interpretation of NEPA, explaining that FERC is not charged with "making local energy decisions" and thus could not "second guess" Indiana's decision to approve CenterPoint's chosen generation mix. The court also affirmed FERC's analysis of the project under the Natural Gas Act ("NGA"), holding that FERC need not—and in fact likely cannot—accord greenhouse gas emissions determinative weight in certificate proceedings.
Citizens Action signals a narrowed application of NEPA going forward—at least in pipeline certificate proceedings. Among other things, NEPA requires an agency to identify the potential environmental impacts of a project and to evaluate any reasonable alternatives that would achieve the project's purpose. FERC defined the purpose of the Texas Gas project as supporting service to CenterPoint's natural gas units and rejected any potential alternatives capable of achieving that specific purpose—for example, expanding an existing pipeline or using an alternate route—because they carried potentially greater environmental impacts.
FERC refused to define the purpose of the project more broadly to reach a different conclusion, and the court agreed. Citizens Action Coalition of Indiana, Inc. argued that the purpose of the project was to support development of renewable energy resources and that FERC should have considered "non-gas" alternatives such as energy efficiency programs or battery storage. But the court emphasized that the selection of generation resources was outside FERC's jurisdiction. Indiana had decided the natural gas units were necessary to support CenterPoint's transition to wind and solar while still ensuring reliability. It was not FERC's role to reconsider the state's judgment. Instead, the purpose of the proposed pipeline was reasonably defined as providing support to the already-approved natural gas units, and FERC need only consider alternatives that would serve that express purpose.
This narrow focus on a project's purpose effectively limits how much consideration can be given to downstream infrastructure that is closely related to a pipeline project but falls outside FERC's jurisdiction. Having agreed that FERC need not consider "non-gas" alternatives in its NEPA analysis, the court also rejected arguments that FERC's environmental impact statement was inadequate because it failed to apply a significance threshold to emissions. The court explained, "NEPA simply does not require an agency to use particular labels indicating the significance of a project's environmental impacts."
Citizens Action also renews questions about the role of environmental considerations in FERC's public convenience and necessity determinations. While the court has "previously recognized that FERC may deny approval based on a pipeline's direct or indirect emissions," the court in Citizens Action stated that, "nothing in the NGA suggests FERC can prioritize environmental concerns over the primary objective of promoting the development of natural gas markets." Thus, while in other recent pipeline certificate decisions the court has implored FERC to provide more robust environmental impact analyses, this language in Citizens Action calls into question FERC's authority to reject pipeline projects outright over environmental considerations.
