Climate Change, FERC, and Natural Gas Pipelines: The Legal Basis for Considering Greenhouse Gas Emissions Under Section 7 of the Natural Gas Act

In: https://doi.org/10.7916/d8-3v6g-0g30

Abstract

As the federal agency charged with overseeing the interstate transportation of natural gas, the Federal Energy Regulatory Commission ("FERC") has recently faced growing criticism over its approval of new pipelines. Critics have lambasted FERC for failing to adequately consider the climate change impacts of pipeline development, particularly the greenhouse gas emissions associated with "upstream" natural gas production and "downstream" use. The D.C. Circuit recently weighed in, holding that the National Environmental Policy Act ("NEPA") requires consideration of downstream greenhouse gas emissions, at least in some circumstances. The precise scope of that requirement continues to be debated before FERC, in the courts, and among scholars. While recognizing the importance of that debate, this Article approaches the issue from a different perspective, exploring whether the Natural Gas Act ("NGA") establishes an independent requirement for FERC to consider climate change impacts, including upstream and/or downstream greenhouse gas emissions. Under section 7 of the NGA, before approving any interstate natural gas pipeline, FERC must find that it "is or will be required by the present or future public convenience and necessity." FERC's finding must be based on an evaluation of all factors bearing on the public interest which necessitates a broad-ranging assessment of the need for pipeline development, its benefits, and costs. This Article contends that, as part of its assessment, FERC must account for the full climate change and other environmental impacts of pipeline development. To support that contention, the Article offers an in-depth look at the history of section 7 of the NGA, and its interpretation by the courts. It also provides a comprehensive analysis of how environmental factors are dealt with by FERC, showing that the Commission historically viewed downstream environmental impacts as a key factor to be considered under section 7 of the NGA, but now largely ignores them. The courts are yet to fully address whether section 7 of the NGA requires FERC to consider upstream and/or downstream environmental impacts when certifying pipeline projects. However, the existence of such a requirement is strongly supported by the language and history of section 7, as well as the case law and administrative materials interpreting it. Indeed, FERC cannot fulfill its statutory obligation under section 7 to ensure pipeline development is required by the public convenience and necessity, without considering upstream and downstream impacts. FERC must, therefore, change its current approach to evaluating pipeline projects. That change could have significant implications for the approval of future projects since, after accounting for environmental impacts, FERC may be unable to conclude that a project is required by the public convenience and necessity.