Despite Unease, D.C. Circuit Upholds FERC Rulings on Tennessee Broad Run Expansion

This article appears as published in Foster Report No. 3252

FERC’s examination of Tennessee Gas Pipeline’s Broad Run expansion project withstood judicial scrutiny, but it did not go without some strong words by the U.S. Court of Appeals for the D.C. Circuit that the Commission is not excused from considering greenhouse gas (GHG) emissions associated with pipeline projects (Birckhead v. FERC, No. 18-1218).

A few observers reacted to the June 4  decision by noting that it essentially rebuked FERC’s policy arguments on why it can ignore or not seek information on GHG emissions for gas pipelines without remanding the case. The court said FERC can deny a pipeline project because of its environmental impacts and that a project’s potential displacement of other fuel sources does not render the calculation of GHG emissions unforeseeable, said Gillian Giannetti, attorney with the Natural Resources Defense Council.

Giannetti and others on Twitter deemed the decision a “warning shot” that FERC’s policy change, which was first made in the Dominion Gas Transmission New Market expansion project, is on shaky legal ground.

Commissioner Richard Glick, who dissented in both case and was at the D.C. Circuit for their oral argument, said the court “unambiguously affirms FERC’s obligation” under the National Environmental Policy Act and Natural Gas Act to consider the reasonably foreseeable upstream and downstream GHG emissions caused by a gas pipeline.

The court said it is “troubled” by FERC arguments that it need not seek information on GHG emissions because they are not foreseeable and it lacks jurisdiction over the upstream and downstream elements of the gas being transported. But because the Commission can deny a pipeline a NGA certificate because it would be too harmful for the environment “the agency is a ‘legally relevant cause’ of the direct and indirect environmental effects of pipelines it approves,” even where it lacks jurisdiction over the production or end-use of the of the gas.

FERC, therefore, is not excused from considering these indirect effects in its NEPA analysis, the court said.

FERC’s order on rehearing approved the compression addition and capacity expansion on the Broad Run project that was challenged on several grounds by a group of landowners – Concerned Citizens – represented by attorney Carolyn Elefant. The court upheld the order on procedural grounds, despite agreeing with many of the arguments made by Concerned Citizens on GHG emissions and FERC’s obligation to consider them.

The wording of the court rebuking FERC arguments was no consolation to Elefant, who said the reason the court gave for denying relief is factually inaccurate. The D.C. Circuit panel said the landowners did not raise the GHG emission issues in the record-development phase at FERC, but the case preceded the court’s 2017 remand of FERC’s order involving Sierra Club and pipeline projects serving Florida and Southeast markets. The group could not raise the legal issue before the court addressed it, Elefant said.

“This ruling is really upsetting to me. I feel as if the D.C. Circuit went out of its way to avoid making a statement in a case that involves landowners,” she said in an email responding to questions. “I think that if an environmental group had brought this suit or joined as amicus, the result would have been very different,” Elefant said.

The June 4 decision upheld FERC’s order approving the expansion, the location of the compressor station that was challenged by Concerned Citizens, and its compliance with NEPA and NGA when it comes to upstream and downstream GHG emissions associated with gas production and end use of the gas flowing through the pipeline expansion. The Commission met its legal obligations, but the three-judge panel said it was troubled by FERC’s lack of effort in seeking information on GHG emissions, raising points similar to those of Commissioners Cheryl LaFleur and Glick when they concurred and dissented in the rehearing order approving the pipeline project.

Because the review under NEPA carries an arbitrary and capricious standard and the landowner group Concerned Citizens did not challenge the record-development issue at FERC about the Commission’s review of GHG emission issues, the court denied the landowners’ petition challenging FERC’s rehearing order.

The court noted that FERC has not asked for information on GHG emissions as an indirect environmental effect of pipeline projects, which was addressed by the D.C. Circuit in the 2017 Sierra Club remand. The three-judge panel said it is “troubled” by FERC’s reasoning in its policy that the Commission does not need to conduct a thorough analysis of GHG emissions because they are not reasonably foreseeable.

“We are skeptical of any suggestion that a project applicant would be unwilling or unable” to obtain such information if FERC were to ask for such data in the certificate application review process, said the three-judge panel’s per curiam decision.

The Concerned Citizens landowner group failed to either persuasively rebut FERC’s analysis or meaningfully dispute its assertion as an exercise in futility. The court’s findings in the Sierra Club decision does not resolve the case in favor of FERC or the landowners, wrote Chief Judge Merrick Garland along with Judges Robert Wilkins and David Tatel.

At several points in the order, the judges raise questions about FERC’s logic in not seeking information on GHG emissions as part of its environmental review under NEPA.

“Despite our misgivings regarding the Commission’s decidedly less-than-dogged efforts to obtain the information it says it would need to determine that downstream [GHG] emissions qualify as a reasonably foreseeable indirect effect of the project, Concerned Citizens failed to raise this record-development issue in the proceedings before the Commission,” the court said. Therefore, it lacked jurisdiction to decide that FERC acted arbitrarily or capriciously and violated NEPA by failing to develop a full record in the case.

Based on the record before it, the court said it has no basis for concluding that FERC acted unreasonably by declining to evaluate the upstream or downstream combustion impacts tied to the Tennessee project as part of its environmental analysis.

NEPA requires FERC to at least attempt to obtain information needed to fulfill its statutory obligation, but no party to date has raised the GHG emission issue to merit a rebuke from the court after the 2017 Sierra Club decision.

The three-judge panel posed plenty of questions to FERC attorneys during oral argument in April, when the Tennessee case and the Dominion New Market expansion was challenged by an environmental group, Otsego 2000, on the GHG emission issue. The D.C. Circuit dismissed the Otsego 2000 petition in May because the group lacked legal standing since it does not have members affected by FERC’s order.

ClearView Energy Partners noted that FERC’s “don’t ask, don’t evaluate” approach to GHG emissions associated with gas pipeline projects does not appear to be sitting well with the D.C. Circuit, as the court has commented in different cases that the policy is not fully consistent with a NEPA review. FERC orders in those cases have been upheld on legal issues apart from the soundness of the FERC policy change that was made in 2017, said Christine Tezak of ClearView.

“We view this precedential decision as giving an admonition to the FERC – and arguably guidance to pipeline opponents – that the court would be willing to grant an appeal if the underlying circumstances were different. That is, we see project opponents as substantially more likely to prevail in future appeals of NEPA reviews related to the Commission’s GHG analysis at the D.C. Circuit” if they raise the issue during the development of the NEPA documents associated with certificate reviews under the Natural Gas Act, Tezak said.

The D.C. Circuit decision also upheld FERC’s analysis of the compressor station in the Broad Run expansion, which was placed in service in the fall of 2018. Elefant challenged FERC’s choice of location for a compressor station and project facilities, asserting that because Tennessee had eminent domain authority at certain locations, site control was a primary factor and the Commission failed to consider more suitable alternatives.

“We disagree,” the court said, referring to several factors that were analyzed among the various locations considered for the compressor station in question. Because FERC identified other factors that weighed in favor of the site used by Tennessee, “we have no basis for saying that the Commission’s alternatives analysis was arbitrary and capricious,” the judges wrote.

A spokeswoman for Tennessee parent Kinder Morgan said the company is pleased with the court’s dismissal of the challenge to the Broad Run expansion. “We believe that this project is important to continue to provide clean, efficient natural gas to the region,” she said.

By Tom Tiernan TTiernan@fosterreport.com

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