October 2021, Vol. 248, No. 10
Government
Top Federal Appeals Court Raps FERC’s Knuckles
By Stephen Barlas, Contributing Editor, Washington D.C.
Not that it needed encouragement, but the Federal Energy Regulatory Commission (FERC) received new legal leverage from a top federal appeals court to do a more thorough job calculating greenhouse gas (GHG) emissions and effects on minority communities when performing environmental impact statements (EIS) and environmental assessments for liquefied natural gas (LNG) and pipeline construction applications.
The U.S. Court of Appeals for the District of Columbia is the court that assesses federal agency compliance with federal laws – in this case, the National Environmental Policy Act (NEPA).
Among the projects at issue is Enbridge’s Rio Bravo Pipeline to be built in south Texas to transport up to 4.5 Bcf/d (127 MMcm/d) of natural gas from the Agua Dulce supply area to NextDecade’s Rio Grande LNG project located in Brownsville, Texas.
In an August decision answering environmental group complaints about FERC’s approval of three LNG projects and affiliated pipelines in Texas, the federal court – which did not cancel the previously awarded construction permits – told FERC to go back and apply a more rigorous counting of GHG emissions and calculate the “significance” of a project’s contribution to climate change.
The court also agreed with the environmental groups that FERC’s analysis of the projects’ impacts on minority communities within only census blocks, within 2 miles (3 km) of the project sites – which is as far as FERC’s analysis went – was arbitrary given FERC’s determination that environmental effects from the projects would extend well beyond 2 miles from the project sites.
It is unclear what FERC might do now that the court dumped the case back into the FERC’s lap without negating the construction approvals. Neither Nathan Matthews, the Sierra Club lawyer who argued the case, nor Jeffrey R. Holmstead, an attorney at Bracewell who represented the Interstate Natural Gas Association of America, responded to requests for comments on what FERC was likely to do as a result of the decision.
Enbridge did not respond either to a query about the potential impact of the decision on its Rio Bravo Pipeline.
The Appeals Court decision revolved around 2016 applications to FERC by Texas LNG Brownsville LLC, Rio Grande LNG LLC and Annova LNG Common Infrastructure LLC. FERC completed an EIS for each project in the spring of 2019 and issued final orders approving the projects later that year. FERC denied environmental group requests for rehearing in early 2020. The groups then filed their lawsuit arguing FERC’s noncompliance with NEPA.
In its EIS for each project, FERC quantified the GHG emissions associated with the construction and operation of the project, described as “existing and potential cumulative climate change impacts in the project area” and explained that “[c]onstruction and operation of the project would increase the atmospheric concentration of [greenhouse gases] in combination with past, current, and future emissions from all other sources globally and contribute incrementally to future climate change impacts,” according to the court decision.
What FERC did not do was determine the “significance” of the GHG emissions’ contribution to climate change, which NEPA arguably requires the agency to do. FERC argued there was no methodology that allows it to calculate GHG emissions’ impact on a regional or even national level.
The Sierra Club led a group of local Texas environmental and citizen groups in first contesting FERC’s project approvals and then at the D.C. Appeals court. They objected to FERC’s EIS because it did not use the “social cost of carbon” protocol or some other generally accepted methodology to evaluate the impact of each project’s contribution to climate change.
The current social cost of carbon is approximately $50 per ton. James Auslander, an attorney at Beveridge & Diamond, said in a blog post that the number is expected to increase significantly when the Biden administration completes its review and updates the social cost of carbon analysis over the next few months.
“This latest decision may also bolster soon-expected federal recommendations for agencies to expand use of the social cost of carbon beyond rulemaking actions to also encompass individual project reviews, and new federal guidance on consideration of GHGs in NEPA analysis,” he wrote. “Because of the substantial costs associated with GHG emissions, use of the Social Cost of Carbon is likely to weigh heavily against pipelines in FERC’s public interest analysis under the Natural Gas Act, at least if the pipeline fails to demonstrate that the gas it proposes to transport would reduce overall GHG emissions by, for example, displacing GHG-intensive electric generation or providing low-GHG alternatives to transportation fuels.”
To assess the environmental justice impacts of each project, FERC examined the project’s impacts on communities in census block groups within a 2-mile radius of the project site, but not on communities farther afield. FERC found that all communities within those census blocks were minority or low-income.
FERC examined potential ecological, aesthetic, historical, cultural, economic, social or health impacts within those communities. The Appeals Court stated FERC should have gone beyond those census tracks when checking on minority communities.
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