FERC Takes a Step Backward on Environmental Impacts

Courtesy of FERC

A 3-2 majority of the Federal Energy Regulatory Commission (FERC) unveiled a new policy last Friday that limits FERC’s analysis and disclosure of the environmental impacts of natural gas pipeline projects. The decision is a step backward for FERC, right when it is soliciting public comment on how to improve its pipeline project reviews.

FERC, which oversees the siting and approval of interstate natural gas pipelines, stated that it will no longer discuss upstream and downstream environmental impacts that it claims fall outside of its review requirements under the National Environmental Policy Act (NEPA). This included a declaration that FERC will no longer prepare upper-bound greenhouse gas emissions estimates for a proposed project when it asserts that those emissions fall outside of its NEPA requirements.

This is wrong for at least two reasons. First, as Commissioners Cheryl LaFleur and Richard Glick noted in dissent, FERC’s policy is circular, in that FERC often does not undergo the proper fact-finding and analysis to determine whether an environmental impact must be considered under NEPA in the first place. Second, FERC’s duties to consider environmental impacts extend beyond NEPA. If FERC ignores these environmental impacts, FERC also will be ignoring information that is essential to deciding whether the project is in the public interest—FERC’s mandate under the Natural Gas Act (NGA).

How FERC unveiled the new policy is also unsettling. FERC buried the announcement within an order upholding its approval of the under-the-radar Dominion New Market Project in New York. This is the second time in less than two months that FERC has buried a significant new policy within an otherwise routine order. Announcing such policies in this fashion undermines public trust in FERC and Chairman Kevin McIntyre’s claim that he views improving FERC’s transparency as a top priority. McIntyre joined Commissioners Neil Chatterjee and Robert Powelson in approving the policy.

Upstream, downstream, direct, indirect, and cumulative effects

To understand what FERC did, it’s important to understand the terminology. The energy world describes natural gas like a river. Production is upstream, transmission is midstream, and end-use is downstream. The emissions that are created through gas extraction are upstream effects because they happen before the gas is transported to the market. Emissions created through burning gas at power plants are downstream effects because they happen after the gas is transported. FERC generally regulates the midstream infrastructure that transports gas from production facilities to end-users.

Under NEPA, FERC is required to consider the direct and indirect effects and cumulative impacts of a proposed action, such as authorizing a new gas pipeline. Direct effects are effects directly caused by the action and occur simultaneously. Indirect effects are caused by the action and are reasonably foreseeable at the time of the action, but may occur later. Cumulative impacts are the impacts that result from the incremental impact of the proposed action when added to other past, present, and reasonably foreseeable future actions, be they federal, state, or private.

NEPA analysis is crucial because it not only requires agencies to review the costs and benefits of the project and its alternatives, but also requires them to disclose this information to the public. The public can then comment, which further assists FERC with its project reviews.

FERC historically resisted calls to include upstream and downstream environmental effects into its NEPA analyses, arguing they are not indirect or cumulative effects because they are not caused by FERC’s action and/or are not reasonably foreseeable. For example, since FERC does not decide whether to authorize the facilities that will use the gas, such as power plants—those decisions are left to the states—FERC has argued that its pipeline approvals do not cause the emissions. FERC also has argued that downstream greenhouse gas effects are not reasonably foreseeable, stating it is impossible to determine the gas’s end-users or how they will consume the gas.

Last year, the D.C. Circuit told FERC that, at least when the end-user is known, FERC must consider downstream greenhouse gas emissions under NEPA. Since then, FERC has included more information about upstream and downstream environmental impacts in its orders, even when it maintains that these effects do not qualify under NEPA. Further, on April 19, 2018, FERC opened a new proceeding requesting comments on how FERC can improve its pipeline review process and devoted an entire section to its treatment of environmental effects. These actions signified some recognition that environmental impacts are relevant not only to NEPA, but also to FERC’s public interest analysis under the NGA.

The new policy undermines that progress

In Friday’s order, FERC declared that it will no longer disclose or consider any environmental impacts outside of NEPA.

In dissent, LaFleur noted that the majority is “essentially arguing that we are not obligated to consider upstream and downstream impacts because there is a lack of causation and reasonable foreseeability,” while ignoring that “a key reason [why] the Commission lacks the specificity of information to determine causation and reasonable foreseeability is because we have not asked applicants to provide this sort of detail in their pipeline applications."

Further, LaFleur stated that “NEPA does not circumscribe the public interest standard” under the NGA. She’s right. It is baffling how FERC can meet its obligation to consider the public interest without analyzing all environmental impacts.

Glick also challenged the majority’s contention that it did not need to consider “consequences beyond those of greatest concern to the public and greatest relevance to the agency’s decision,” questioning how climate change would not qualify under this standard.

We’re not looking for perfection

For FERC to ignore environmental impacts it determines to be too attenuated—a determination based on its own weak analysis—is short-sighted and misguided.

As Glick stated, there may be instances where, despite FERC’s best efforts, “it will not have sufficient information to assess the consequences that issuing a particular certificate may have for climate change.” But “it is the fact that the Commission made every effort” to identify the impacts that satisfies FERC’s statutory obligations.

Glick is right. FERC must make these efforts.

About the Authors

Gillian Giannetti

Project Attorney, Sustainable FERC Project, Climate & Clean Energy Program

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