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Recent D.C. Circuit Decisions Urge FERC to Reconsider Its Analysis of Environmental Impacts for Natural Gas and LNG Projects
In a series of recent orders, the D.C. Circuit has renewed its prodding of the Federal Energy Regulatory Commission ("Commission" or "FERC") to strengthen its environmental reviews of proposed pipeline projects. On July 30, 2024, in New Jersey Conservation Foundation, et al. v. FERC, the court vacated the Commission's approval of Transcontinental Gas Pipe Line Company's ("Transco") expansion project in New Jersey and eastern Pennsylvania. The court had two major points of contention with the Commission's analysis: (i) the Commission failed to properly weigh the evidence on whether there was a need for the project, and (ii) while the Commission acknowledged, and even quantified, the greenhouse gas emissions expected from the project, it failed to evaluate how these adverse impacts weigh against the project's benefits. This decision is in line with the D.C. Circuit's recent concern surrounding greenhouse gas emissions and other environmental impacts of natural gas and liquified natural gas ("LNG") projects and, more importantly, the Commission's consideration of these concerns in its certification procedures. The court's decision to vacate the certificate order left Transco in the lurch, as it had already completed a substantial portion of the project and had even commenced service on the completed facilities. It has asked the Commission to issue a temporary certificate to continue operations pending the Commission's response to the court's remand order, and the Commission's response is pending.
On the heels of the Transco decision, the D.C. Circuit also took issue with the Commission's environmental analysis of multiple LNG projects. On August 7, 2024, the court vacated the Commission's approval of two separate LNG projects in City of Port Isabel v. FERC. Again, the court found that the Commission had not properly weighed the potential harm from greenhouse gas emissions against each of the LNG project's benefits, despite the D.C. Circuit previously directing the Commission to consider these harms more thoroughly. In these recent LNG decisions, the Commission's environmental analysis—or lack thereof—was central to the court's decision to vacate the certificate orders.
The import of these decisions is clear. Going forward, the Commission will need to go beyond acknowledging potential environmental harms in its natural gas and LNG certificate proceedings. The D.C. Circuit is expecting to see a robust analysis that evaluates the greenhouse gas impacts of a pipeline project, and explains how the Commission weighed those impacts against project benefits and factored them into its decision. FERC Chairman Willie Phillips, during the Commission's September 2024 meeting, characterized these recent court decisions as a shift in the legal landscape regarding pipeline certifications. This shift could lead the Commission to reconsider its current policy statement for analyzing natural gas and LNG project certificates—a policy that is a quarter century old. The Commission has previously argued for a revamp of the pipeline policy statement. In 2022, former FERC Chairman Richard Glick attempted to push through revisions, but after industry opposition, the changes were put on hold. The D.C. Circuit's recent decisions appear to open the door for a reconsideration of the Commission's pipeline review policies.
