D.C. Circuit Questions FERC’s Actions, but Ultimately Upholds Approval of Broad Run Pipeline Project on Appeal

On June 4, 2019, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) upheld FERC’s authorization for Tennessee Gas Pipeline Company (“Tennessee”) to build a new natural gas compressor station as part of its Broad Run Expansion Project (“the Project”). Petitioners had argued, among other items, that FERC’s decision to approve the Project violated the National Environmental Policy Act (“NEPA”) by failing to address the reasonably foreseeable indirect environmental impacts resulting from: 1) increased gas production upstream of the Project, and 2) increased gas combustion downstream of the Project. While the D.C. Circuit rejected the Petitioners’ arguments, it did so on jurisdictional grounds. After concluding that FERC should have asked Tennessee for information about the upstream and downstream indirect environmental effects associated with the Project, the D.C. Circuit held that it lacked jurisdiction to conclude that FERC acted arbitrarily or capriciously because Petitioners did not argue that FERC violated NEPA by failing to seek out this information.

Regarding upstream environmental impacts, the D.C. Circuit reiterated that an increase in upstream gas production could qualify as an indirect environmental impact under NEPA if it is both reasonably foreseeable and causally connected to the new facility. The court pointed out that FERC lacked information regarding this issue in part because it had not asked Tennessee to provide it, and expressed skepticism regarding FERC’s conclusion that asking for such information would be an exercise in futility. But because Petitioners did not claim that FERC’s failure to seek additional information violated NEPA, the D.C. Circuit held that it was left with no basis to do so on its own.

Regarding downstream environmental impacts, the D.C. Circuit rejected Petitioners’ argument that combustion-related emissions are necessarily a reasonably foreseeable indirect effect of a pipeline project, as well as FERC’s arguments that downstream emissions are not a reasonably foreseeable indirect effect of a pipeline project because the gas transported may displace existing natural gas supplies or higher-emitting fuels. Instead, the D.C. Circuit noted that NEPA requires FERC to “at least attempt” to obtain information about the destination and end use of the gas in making a determination on downstream impacts, and that a NEPA analysis may require an agency to undertake some reasonable forecasting or to make educated assumptions. Although FERC made no effort to obtain the missing consumption information from Tennessee as part of its NEPA analysis, the D.C. Circuit again concluded that Petitioners failed to raise the record-development issue in the proceedings before FERC and that, as a result, the court lacked jurisdiction to decide whether FERC violated NEPA by failing to further develop the record. The D.C. Circuit thus held that it had no basis to conclude that FERC acted arbitrarily or capriciously in declining to evaluate downstream combustion impacts as part of its NEPA indirect environmental effects analysis.

The D.C. Circuit’s opinion is available here.