Landowners and environmental groups are bringing increasingly sophisticated challenges to gas pipeline projects and sometimes succeed in delaying development, but in recent cases they have ultimately lost on the merits. The latest setback for pipeline opponents came in July in Gunpowder Riverkeeper v. FERC, where the D.C. Circuit rejected an environmental group's challenge to a Federal Energy Regulatory Commission ("FERC") order approving a gas pipeline expansion project.[1] Recent FERC orders have also consistently found that new projects will benefit the public despite environmental groups' concerns.
Pipelines have responded to steady demand for expansion of gas
infrastructure with proposals for numerous new and expanded
projects. In particular, shippers require additional capacity to
support conversions from coal to gas-fired generators, as well as
to move liquefied natural gas ("LNG") to export
facilities. In deciding whether to authorize construction and
operation of the projects under section 7 of the Natural Gas
Act,[2] FERC "balanc[es] the public benefits,"
such as more reliable and efficient service, "against the
potential adverse consequences" to determine whether the
project will serve the public interest.[3] FERC also
conducts an Environmental Assessment of each proposal under the
National Environmental Policy Act ("NEPA"), examining the
proposal's potential impacts on numerous environmental
resources. As part of the Environmental Assessment, FERC must take
a "hard look" at each project's potential impact and
include "sufficient discussion of the relevant issues and
opposing viewpoints,"[4] meaning that in some cases
it must undertake further study that may result in project delays
in order to develop the necessary analysis. FERC employs a range of
options, including imposition of mitigation measures as a condition
of approval, to address environmental concerns.[5] It
need not conduct further environmental analyses where it concludes
that "there would be no significant [environmental] impact or
[it has] planned measures to mitigate such
impacts."[6]
Last year, the D.C. Circuit in Delaware Riverkeeper v.
FERC remanded a pipeline approval to FERC for further
consideration of the "cumulative environmental impacts"
of a group of closely related natural gas pipeline projects.
[7] The court held that NEPA requires FERC to provide
more than a "cursory statement" describing a
project's environmental effects "when added to other past,
present, and reasonably foreseeable future actions" in the
same geographic area.[8] While the court signaled
apparent willingness to scrutinize the rigor of FERC's NEPA
review, over the past 14 months, the decision has not amounted to a
significant hurdle for project approvals at either the FERC or the
appellate level.
In the wake of Delaware Riverkeeper, FERC has declined
invitations from many pipeline opponents to broaden the scope of
its NEPA reviews. For example, FERC has repeatedly refused to
consider global climate change as a cumulative impact of proposed
projects. FERC reasons that it is impossible to quantify a given
project's impact on climate change, as "[t]here is no
standard methodology to determine how a project's incremental
contribution to greenhouse gases would result in physical effects
on the environment, either locally or globally."[9]
Accordingly, FERC has held that climate change impacts stemming
from future development of upstream production fall outside the
scope of the required analysis because they are
"speculative"[10] and not
"'reasonably foreseeable' within the meaning of the
rules governing environmental assessments.[11] FERC
similarly has rejected the argument that it must consider
downstream greenhouse gas emissions as a cumulative impact of a
specific project.[12]
Given that FERC has consistently rejected calls to expand the reach
of its NEPA analyses since Delaware Riverkeeper, pipeline
opponents continue to build new variations on their existing
arguments in opposition to project approvals. The Sierra Club, for
instance, sought rehearing of FERC's April 2015 approval of the
Sabine Pass Liquefaction's LNG export facility. It asserted
that FERC violated NEPA requirements by failing to take a
"hard look" at the effects of greenhouse gas emissions in
connection with the project[13] and failing to consider
"increases in gas production, increases in domestic coal use,
and increases in gas use in importing countries" that may
result from export projects.[14] It further argued that
the "social cost of carbon" method, a technique for
estimating monetized damages associated with incremental increases
in carbon levels, enables FERC to quantify climate change impacts
and consider them in its NEPA analysis.[15] The Sierra
Club noted that December 2014 draft guidance from the Council on
Environmental Quality ("CEQ") "specifically
identifies the social cost of carbon as a tool to use to provide
context for discussion of greenhouse gas
emissions."[16]
In response, FERC held that it could not use the social cost of
carbon tool to determine whether the project would cause
significant climate change impacts because the "tool cannot
predict the actual environmental impacts of a project on climate
change."[17] FERC adhered to its precedent and
declined to expand the scope of the NEPA analysis because it could
not determine "whether the project's contribution to
cumulative impacts on climate change would be
significant."[18]
The D.C. Circuit has likewise rejected attempts by environmental
groups to expand on Delaware Riverkeeper and require FERC
to perform more expansive environmental analyses under a wider
range of circumstances. In both Myersville and
Minisink Residents for Environmental Preservation and Safety v.
FERC,[19] the court drew factual distinctions
indicating that Delaware Riverkeeper's impact will
remain confined to the narrow set of facts underlying that case.
Most recently, in Gunpowder Riverkeeper v. FERC, the D.C.
Circuit held that Gunpowder Riverkeeper lacked a valid cause of
action to challenge a pipeline approval under NEPA, as well as the
Natural Gas Act and the Clean Water Act.
Gunpowder Riverkeeper had argued before FERC that the agency's
environmental assessment improperly failed to consider numerous
environmental impacts, including "how the [project at issue]
might affect demand for additional development of the Marcellus or
other, unconventional Shale plays...."[20] After
FERC rejected Gunpowder Riverkeeper's request for rehearing of
the order authorizing construction of the facilities at issue in
that proceeding,[21] Gunpowder Riverkeeper chose to
frame its appeal differently by asserting that eminent domain
actions resulting from the project approval threatened its
members' property interests. The D.C. Circuit rejected this
approach. Holding that the group lacked a valid cause of action,
the court construed standing requirements narrowly, reasoning that
landowners' interests in protecting their property from seizure
by eminent domain did not fall within the "zone of
interests" protected by NEPA, the Natural Gas Act, or the
Clean Water Act.[22] While the court acknowledged that
"the affidavits of Gunpowder's members contain some
assertions of injury that could be construed as
environmental," it determined that Gunpowder did "not
invoke them for the purpose of showing environmental
harm."[23] In the NEPA context, "[b]ecause
Gunpowder did not argue that its members would suffer any
environmental harm—indeed it expressly disclaimed the need to
do so," the court concluded that Gunpowder Riverkeeper fell
outside the zone of interests protected by the
statute.[24]
Even if future challengers avoid the pitfall that proved fatal in
Gunpowder Riverkeeper by framing their injuries in terms
of environmental harm, the dissent articulated an alternative basis
for denying relief. Namely, the dissent disagreed with Gunpowder
Riverkeeper's arguments on the merits and in particular
rejected a claim that FERC's environmental analysis improperly
relied on other agencies' work.[25] Instead, the
dissent praised FERC for demonstrating an "appreciation of
relevant views" during the review
process.[26]
Thus, while future petitioners are now on notice that they must
expressly allege "environmental" injuries to advance
their claims, Gunpowder Riverkeeper shows that pipeline
opponents continue to face both procedural and substantive hurdles
that may be difficult to anticipate. Recent developments that
initially appeared advantageous for pipeline opponents have not
proven to be game-changers. Both FERC and the courts have
maintained a consistent approach to project approvals, and FERC
retains great discretion in fulfilling its NEPA obligations while
also taking into account the ways in which new projects will
benefit the public.
Footnotes
[1] Gunpowder Riverkeeper v. FERC, No. 14-1062, 2015 WL 4450952 (D.C. Cir. July 21, 2015).
[2] 15 U.S.C. § 717f.
[3] Certification of New Interstate Natural Gas Pipeline Facilities, 88 FERC ¶ 61,227, at 61,745 (1999), clarified, 90 FERC ¶ 61,128, further clarified, 92 FERC ¶ 61,094 (2000).
[4] Myersville Citizens for a Rural Community, Inc. v. FERC, 783 F.3d 1301, 1324-25 (2015) (citing Nevada v. Dep't. of Energy, 457 F.3d 78, 93 (D.C. Cir. 2006)).
[5] See id. at 1322.
[6] Id. (quoting Mich. Gambling Opposition v. Kempthorne, 525 F.3d 23, 29 (D.C. Cir. 2008)).
[7] Delaware Riverkeeper Network v. FERC, 753 F.3d 1304 (D.C. Cir. 2014).
[8] Id. at 1319-20.
[9] Columbia Gas Transmission, LLC, 149 FERC
¶ 61,255, at P 125 (2014).
[10] Dominion Cove Point LNG, LP, 151 FERC ¶ 61,095, at P 57 (2015).
[11] Sabine Pass Liquefaction Expansion, LLC, 151 FERC ¶ 61,012, at P 94 (2015) (citing "Addendum to Environmental Review Documents Concerning Exports of Natural Gas from the United States," issued May 29, 2014).
[12] Dominion Cove Point LNG, LP, 151 FERC at P 58.
[13] Request for Rehearing of the Sierra Club, Docket Nos. CP13-552 and CP13-553 (May 6, 2015) at 17.
[14] Id. at 21.
[15] Id. at 19.
[16] Id.
[17] Sabine Pass Liquefaction Expansion, LLC, 151 FERC ¶ 61,253, at P 48 (2015).
[18] Id. at P 45.
[19] 762 F.3d 97 (2014).
[20] Petition for Rehearing by Gunpowder Riverkeeper, Docket No. CP13-8-000 (Dec. 20, 2013) at 17 (quoting EPA letter).
[21] Columbia Gas Transmission, LLC, 146 FERC ¶ 61,116 (2014).
[22] Gunpowder Riverkeeper, 2015 WL 4450952 at **3-5.
[23] Id. at *5.
[24] Id. at *5.
[25] Id. at *11 (Rogers, J., dissenting).
[26] Id.
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