Including Climate Change in Environmental Impact Analyses

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D.C. Circuit holds federal energy regulators must consider pipeline project’s impact on climate change.

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Is climate change a “reasonably foreseeable” consequence from a government agency’s approval of a natural gas pipeline? What if an entirely separate agency regulates the facilities that will actually burn the transported gas? And what if the construction of the new pipeline would enable the retirement of older coal-powered plants and thus lessen overall climate impacts?

A three-judge panel of a federal court of appeals recently grappled with these questions and determined that the Federal Energy Regulatory Commission (FERC)—in considering and approving the construction of a natural gas pipeline project—should have considered the eventual burning of natural gas when weighing environmental concerns.

The case, Sierra Club v. Federal Energy Regulatory Commission, involved a challenge by the Sierra Club and two other environmental groups to FERC’s approval of a project for the construction of three natural gas pipelines, including one that would travel from Alabama to Florida. Scheduled for completion by 2021, the project would provide capacity to transport “over one billion cubic feet of natural gas per day” to power plants in Florida.

The Natural Gas Act gives FERC authority to approve the construction of natural gas pipelines. To construct a pipeline, a developer must first obtain a certificate from FERC. The agency grants the certificate “upon a finding that the project will serve the public interest,” and the agency can attach conditions to its grant of approval “as the public convenience and necessity may require.”

In addition, the National Environmental Policy Act of 1969 (NEPA) requires that federal agencies produce an “environmental impact statement” (EIS) for all “major Federal actions significantly affecting the quality of the human environment.” The EIS must address potential “adverse” consequences of the action and possible alternatives to it.

Shortly after FERC completed its EIS for the natural gas pipeline at issue in Sierra Club v. FERC, the agency issued a certificate authorizing construction of the project.

The environmental groups challenging FERC’s approval of the project argued that the agency failed to perform a proper EIS. The groups expressed concern that the burning of the natural gas being transported by the pipelines could “hasten climate change and its potentially catastrophic consequences,” and that FERC had failed to take those effects into account when developing its EIS. After FERC denied the groups’ request to halt construction of the project, the groups sought review by the U.S. Court of Appeals for the District of Columbia Circuit—the federal court expressly granted authority by the Natural Gas Act to hear challenges to FERC’s orders.

The question for the court was whether FERC was required—in completing its EIS—to consider the fact that the natural gas carried by the pipelines would ultimately be used in Florida power plants, which would generate electricity and emit greenhouse gas.

According to Judge Thomas Griffith, who authored the majority’s opinion, FERC should have included in its EIS at least an estimate of the “power-plant carbon emissions that the pipelines will make possible.”

In analyzing FERC’s approval of the project, the court emphasized that its role “in reviewing agency compliance with NEPA is…limited,” and that its function is simply to make sure FERC has “considered and disclosed the environmental impact of its actions and that its decision is not arbitrary.” For an agency’s EIS to be sufficient, the court explained, it must include enough consideration of the issues and competing arguments to allow for “informed public comment and informed decision making.”

The court then explained that agencies are required to “consider not only the direct effects, but also the indirect environmental effects” of the proposed action. Furthermore, the agency must consider those effects that are “reasonably foreseeable.” The court asserted that the reasonably foreseeable effects of FERC’s decision—authorization of the construction of the pipeline project—clearly included burning the transported gas in Florida power plants. Indeed, the court observed, the burning of natural gas—which entails the release of carbon emissions—“is the project’s entire purpose.”

Having held that FERC’s EIS failed to consider adequately the eventual burning of the natural gas that will be carried by the pipelines and the resultant greenhouse gas emissions, the majority remanded the case back to the agency for preparation of a sufficient EIS.

Judge Janice Brown dissented from the majority’s decision requiring FERC to consider what she called “downstream greenhouse emissions.” In her view, when adverse environmental consequences are “contingent upon the issuance of a license from a separate agency, the agency under review is not required to address those indirect effects in its NEPA analysis.”

Moreover, Judge Brown asserted that the majority misunderstood the meaning of “reasonably foreseeable.” She explained that because “FERC has no control over whether the power plants that will emit these greenhouse gases will come into existence or remain in operation,” any eventual climate effects resulting from the gas pipelines’ construction are not “within NEPA’s ambit.”

In response, the majority acknowledged that an agency is not required to consider effects of an action under NEPA when the “agency has no legal power to prevent a certain environmental effect.” But in FERC’s case, the majority argued, Congress had expressly directed FERC to consider the “public convenience and necessity” when deciding whether to authorize pipeline construction. Because FERC is broadly empowered to consider the pros and cons of a proposed project, the majority said, the agency’s approval decision can be considered a cause of the “environmental effects of pipelines it approves.”

Judge Brown, however, observed that Florida’s Power Plant Siting Act requires that gas plant construction approval be obtained from a separate state board, and therefore “no power plant is built or expanded in the state of Florida—and consequently no greenhouse gases are emitted from Florida power plants—without the Board’s approval.” As a result, she reasoned in her dissenting opinion, FERC should not be required to consider “indirect environmental effects resulting from the Board’s licensing decision” when performing NEPA review.