October 2024, Vol. 251, No. 10
Government
Federal Court Slaps FERC’s Hands on Project Approvals
By Stephen Barlas, Contributing Editor, Washington, D.C.
(P&GJ) — According to the Interstate Natural Gas Association of America (INGAA), 2023 saw the smallest increase in added interstate pipeline capacity on record in the United States.
Two recent federal appeals court decisions make it unlikely that 2024 and beyond will see an improvement in that statistic, even as interstate pipeline building becomes more important given increased demand from electric generators, data centers and auto electrification.
The U.S. Court of Appeals for the Washington, D.C., district hears cases dealing with decisions made by federal agencies such as the Federal Energy Regulatory Commission (FERC).
In July, the court twice sided with parties who argued the FERC had not done enough analysis of how new pipeline capacity might increase greenhouse gas emissions, and in one of the cases the court argued that the FERC had not proven that the added capacity was even needed. In one of the cases, the court took the rare step of terminating FERC’s approval of a Transco pipeline in the northeast which is already in operation.
That decision was New Jersey Conservation Foundation, et al. v. FERC issued July 30. It is especially noteworthy because the court “vacated,” i.e., terminated, the FERC approval of the Transcontinental Gas Pipe Line Company (Transco)’s Regional Energy Access Expansion Project. The project is already in operation and covers 36.1 miles of new natural gas pipeline facilities running through New Jersey, New York, Delaware, Maryland and Pennsylvania.
A Williams Company spokesman (Transco is a Williams subsidiary) told P&GJ, “We are in the process of taking the necessary regulatory and legal steps to maintain the vital service we provide.”
A Washington energy attorney, who did not want to be identified, says Williams has two options. It can file an appeal for a rehearing with the court —that had to be done in 45 days — or request a temporary certificate from the FERC which would allow the pipeline to keep operating.
FERC did issue a temporary certificate the last time the Appeals Court “vacated” one of the FERC’s certificates, that with the Spire Pipeline in St. Louis in December 2021. But the energy attorney says, “There is a real risk the pipeline may have to shut down, but I think it is a relatively low chance.”
The Transco decision centered on whether FERC had adequately considered the greenhouse gas emissions from the project when determining if those emissions were “significant” which is a requirement of the National Environmental Policy Act (NEPA).
The issue of GHG emissions and whether FERC totaled them previously as part of its environmental impact statement has been a bedeviling issue for the FERC in a number of recent cases that ended up in the D.C. appeals court.
In its Transco decision, the court alluded to a prior FERC approval of a Northern Natural Gas pipeline where the FERC was able to make a case-specific significance determination yet “provides no justification for why it cannot determine significance here.”
The Northern Natural Gas project involved a replacement project where it was easy for the FERC to determine that the minimal new emissions were not significant. So the comparison of Northern Natural to Transco is something of an apples to oranges comparison.
Two weeks earlier, the court had rapped the FERC’s knuckles in its decision in Healthy Gulf, et al. v. FERC where environmental groups argued FERC’s approval of the Commonwealth LNG LLC’s facilities in Louisiana was based on an inadequate environmental impact analysis.
Here the court sent the certificate back to FERC on remand, meaning there is no immediate threat to the project as FERC seeks additional information from Commonwealth. But whether GHG emissions are “significant” and can be tabulated was at issue here as well as in Transco.
The court focused on three main issues: The court found that FERC’s failure to determine the significance of GHG emissions was insufficient and required further explanation, as well as more detail on NO2 emissions, on remand.
Both the Transco and Commonwealth court decisions leave a lot to the imagination for interstate pipelines as to their figuring GHG emissions as part of a Section 3 application for new capacity. New final guidance on NEPA from the White House Council on Environmental Quality (CEQ) doesn’t really provide a bright line for the FERC either.
In fact, the Biden CEQ eased the guidelines somewhat from their draft stage in favor of pipelines. The final guidance says the FERC does not have to make a “significance” determination if “…the necessary quantification tools, methodologies, and data inputs…” are not available.”
But there is some room in the final guidance for agency interpretation. For example, even if a significance determination cannot be made because of the absence of “tools, etc.” the agency should provide “a qualitative analysis and its rationale for determining that the quantitative analysis is not warranted.” The CEQ notes that “the determination of the potential significance of a proposed action remains subject to agency practice for the consideration of context and intensity.”
It would be nice if Congress clarified this mess. The Senate’s energy permitting bill, which has no chance of passing Congress but passed the Senate committee with a bipartisan majority, does not address this issue in the slightest, which it could have done.
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