NEPA Review of Pipeline Project Upheld by D.C. Circuit – With Asterisk

On June 4, the D.C. Circuit issued a decision in Birckhead, et al. v. FERC, in which the petitioners challenged the Federal Energy Regulatory Commission’s (“FERC”) environmental review of a natural gas pipeline project.[1] Although the court ultimately rejected the challenge, the court suggested in dicta that FERC should do more to obtain information on upstream and downstream carbon emission impacts when conducting environmental review of a project.

The petitioners challenged FERC’s authorization of a natural gas compression station in Tennessee that would facilitate the transportation of natural gas through the interstate pipeline network. One of petitioners’ key arguments was that FERC violated the National Environmental Policy Act (“NEPA”) by failing to consider the impacts of the project on greenhouse gas emissions caused by activities upstream of the proposed project, such as increased natural gas extraction, and downstream from the proposed project, such as increased natural gas combustion.

Under NEPA, FERC must consider a proposed project’s environmental impacts, including its reasonably foreseeable direct and indirect effects. In 2017, the D.C. Circuit held in Sierra Club v. FERC that “indirect environmental effects” included the downstream greenhouse gas emissions resulting from a proposed pipeline project.[2]

FERC declined to consider either upstream or downstream greenhouse gas emissions from the project at issue in Birckhead, arguing that they did not qualify as indirect effects. With respect to upstream impacts, FERC argued that there was insufficient evidence in the record to demonstrate a causal connection between the project and upstream gas production. Although the court suggested that it was “troubled” by FERC’s claim that it could not consider upstream impacts due to a lack of evidence in the record, the Court held that, because Petitioners had not claimed that FERC violated NEPA by failing to seek out additional information, the Court had no basis to conclude that FERC had acted arbitrarily or violated NEPA by not considering those impacts.  The court thus provided a roadmap for other pipeline challengers to make such arguments.

With respect to downstream impacts, FERC argued that, unlike in Sierra Club, it could not evaluate the potential downstream greenhouse gas emissions associated with the proposed compression station because the destination and end users of the natural gas were unknown. The court stated that it had “misgivings” about FERC’s “decidedly less-than-dogged efforts” to obtain the information it would have needed to evaluate downstream greenhouse gas emissions, but noted that, again, petitioners had not raised this issue in proceedings before FERC. Therefore, the court concluded that it had no basis for holding that FERC had acted unreasonably.

Although the court ultimately denied the petition for review in Birckhead, it engaged in a lengthy discussion about whether and how FERC could have obtained additional information in order to determine whether the project’s upstream and downstream impacts are reasonably foreseeable. This dicta suggests that FERC should do more in the future to develop the record in order consider the climate change impacts of potential pipeline projects, or risk a successful challenge. In addition, this decision creates a path for future litigants to challenge any future failure of FERC to seek out additional information during the NEPA review process.

[1] Birckhead, et al. v. FERC, No. 18-1218 (D.C. Cir. June 4, 2019).

[2] Sierra Club v. FERC, 867 F.3d 1357 (D.C. 2017).