On August 22, 2017, a divided D.C. Circuit panel sided with the Sierra Club and other environmental groups by concluding that the Federal Energy Regulatory Commission ("FERC") didn't adequately analyze the impacts of greenhouse gas ("GHGs") emissions that may result from a $3.5 billion natural gas pipeline to be constructed through Florida. See Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017) (No. 16-1329).  The project in question is an approximately 500-mile long natural gas pipeline scheduled to be completed in 2021 and which is projected to carry over one billion cubic feet of natural gas per day.

Section 7 of the Natural Gas Act vests jurisdiction to approve such a pipeline with FERC. Before such a pipeline can be approved, FERC must grant the developer a certificate of public convenience and necessity (often referred to as a Section 7 certificate). Prior to issuing the Section 7 certificate for this project, FERC prepared an environmental impact statement ("EIS") as required by the National Environmental Policy Act ("NEPA"). Sierra Club and other environmental groups challenged FERC's EIS and subsequent Section 7 certificate on the grounds that it failed to adequately consider the pipeline's contribution to GHG emissions and its impact on low-income and minority communities.

After dealing with several jurisdictional issues (including standing), the court addressed the merits of plaintiffs' claims.  First, the court disagreed with plaintiffs' argument that the EIS failed to adequately consider the project's impact on low-income and minority communities, noting that the EIS acknowledged and considered all of the concerns that the plaintiffs now raised. The court stated that the EIS "gave the public and agency decision makers the qualitative and quantitative tools they needed to make an informed choice for themselves. NEPA requires nothing more."

Turning next to plaintiffs' argument that the EIS failed to adequately consider the effect of GHGs that would be emitted by power plants in Florida that would burn the natural gas transported by the pipeline, the court noted that NEPA requires that an agency consider not only the direct effects, but also the indirect environmental effects, of the project under consideration. The court concluded that the reasonably foreseeable effects of authorizing a pipeline that transports natural gas is that the natural gas will in fact be burned, which will in turn generate GHG emissions. As such, the court concluded that the EIS "should have either given a quantitative estimate of the downstream greenhouse gas emissions that will result from burning the natural gas the pipelines will transport or explained more specifically why it could not have done so." The EIS then needed to include a discussion as to the "significance" of these GHG emissions as well as the incremental impact of these emissions when added to other past, present, and reasonably foreseeable future actions. Notably, the court rejected FERC's "practical objection" that assessing GHG emissions in the EIS requires too much speculation because it cannot know exactly what quantity of GHGs may be emitted as a result of the pipeline approval, given uncertainty in how much gas may be consumed by the power plants. The court thus remanded the matter back to FERC for preparation of an EIS consistent with the court's opinion.

In response to the court’s remand, FERC quickly issued a supplemental environmental impact statement (“SEIS”) which analyzed downstream GHG emissions from the three power plants that would be served by the pipeline and concluded that the emissions would not have a significant environmental impact.  FERC concluded that the GHG emissions from the pipeline would represent between 3.7% and 9.7% of Florida’s total GHG emissions but noted that it was unable to find a suitable method to evaluate the discrete environmental effects of these emissions.  The public comment period on the SEIS runs through November 20, 2017, and it is likely that the Sierra Club will challenge the SEIS as being inadequate and failing to adequately evaluate the impact of the project’s GHG emissions.

The court's decision could have far-reaching impacts on EIS procedures for proposed pipeline projects generally, especially given the court's rejection of FERC’s long-held position that assessing GHG emissions beyond the operations of the pipeline itself is too speculative to be useful for NEPA purposes.  For example, will FERC need to evaluate potential GHG tailpipe emissions from automobiles that will burn gasoline that is ultimately produced from petroleum that flows through a pipeline?  Does the Department of Energy need to evaluate GHG emissions that might be generated by LNG exports?  These issues remain in flux following the D.C. Circuit’s opinion.