On September 27, 2017, FERC Staff issued a draft supplemental environmental impact statement (“EIS”) for the Southeast Market Pipelines Project (“SMP Project”) in response to the U.S. Court of Appeals for the D.C. Circuit’s (“D.C. Circuit”) decision in Sierra Club v. FERC, which directed FERC to supplement its final EIS by estimating the downstream incremental greenhouse gas emissions resulting from the SMP Project and explaining whether it considers the “Social Cost of Carbon” tool useful for National Environmental Policy Act (“NEPA”) purposes. In the draft supplemental EIS, FERC Staff (1) estimated the downstream incremental greenhouse gas emissions in Florida resulting from the project, and affirmed its conclusion in the final EIS that the SMP Project, with certain mitigation measures, will not result in significant adverse effects on the environment, and (2) explained that it does not find the “Social Cost of Carbon” tool useful for project-level NEPA analyses.

As proposed in the original certificate applications, the SMP Project will be composed of three related natural gas pipeline projects involving the construction and operation of approximately 685 miles of pipeline and associated facilities to deliver natural gas to certain natural gas-fired power plants in Florida. In December 2015, FERC issued a final EIS for the SMP Project finding that, with certain mitigation measures, the SMP Project will not result in significant adverse effects on the environment. After FERC issued an order approving all three projects in February 2016, and denied rehearing requests of its approval order in September 2016, environmental groups and certain landowners appealed to the D.C. Circuit.

In Sierra Club v. FERC, the D.C. Circuit held, among other things, that FERC’s analysis in the final EIS was inadequate. Specifically, the D.C. Circuit held that FERC should have included an estimate of the “reasonably foreseeable” downstream greenhouse gas emissions indirectly caused by the SMP Project, since all of the natural gas transported through the SMP Project will be delivered to natural gas-fired power plants. Thus, the D.C. Circuit directed FERC to supplement its EIS to include an estimate of the SMP Project’s impact on downstream greenhouse gas emissions, as well as to explain in the EIS whether the Social Cost of Carbon – a tool that attempts to quantify the costs associated with greenhouse gas emissions – is useful for NEPA reviews.

In the draft supplemental EIS, FERC Staff estimated the potential increase of annual carbon dioxide emissions resulting from the power plants to be served by the SMP Project, as well as the decrease resulting from certain power plants retiring or switching to only natural gas as a result of the project. FERC Staff concluded that the SMP Project likely will result in a net increase in downstream greenhouse gas emissions in Florida. However, FERC Staff also concluded that it could not identify a reliable method to measure the SMP Project’s effect on global greenhouse gas concentrations. Furthermore, FERC Staff determined that the Social Cost of Carbon tool is not useful for NEPA analyses because (1) as noted by the U.S. Environmental Protection Agency, results from the analysis can vary significantly depending on changes to certain inputs; (2) the tool does not measure the incremental effects of a project on the environment; and (3) there are no established monetary values that can be used in a NEPA analysis. Accordingly, FERC Staff affirmed its conclusion from the final EIS that, with certain mitigation measures, the SMP Project will not result in a significant adverse effect on the environment.

The draft supplemental EIS can be found in FERC Docket Nos. CP14-554, CP15-16, and CP15-17. A copy of the draft supplemental EIS is available here.