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Environment & Energy Report

Dominion Pipeline Demise Delays Closer Look at Climate Impacts

July 15, 2020, 10:00 AM

Energy companies’ decision to cancel the Atlantic Coast pipeline has dealt an under-the-radar setback to the environmental movement, prolonging a legal campaign to force federal regulators to take a closer look at pipelines’ climate impacts.

Environmentalists have spent years pushing the Federal Energy Regulatory Commission to expand its analysis of the greenhouse gas emissions from natural gas projects. They’ve gained some traction in the courtroom, and an upcoming Atlantic Coast court case would have been an opportunity to build on that.

Challengers asked federal judges to corner FERC on climate change and order the agency to think harder about the on-the-ground impacts of pipeline-related emissions. FERC lawyers maintained that the commission met its legal obligations, and further climate analysis would be speculative.

With Dominion Energy Inc. and Duke Energy Corp.'s July 5 decision to scuttle the Atlantic Coast pipeline, the related court case will soon be dismissed, and the debate will go unresolved for now.

The cancellation is a “wonderful development,” Natural Resources Defense Council attorney Gillian Giannetti said, “but of course it also means the core problems that were at issue in a case are not going to get in front of a court.”

‘Fully Weighing’ Impacts

Giannetti and other environmental advocates have long viewed FERC’s approach to climate analysis as too constrained and surface-level.

FERC generally estimates greenhouse gas emissions that come directly from pipelines and the construction process. But it’s resistant to looking at related upstream and downstream impacts: greenhouse gases released from natural gas production that feed a pipeline, and the power plants that ultimately burn its fuel.

A landmark 2017 decision from the U.S. Court of Appeals for the District of Columbia Circuit forced FERC to study those downstream impacts for some pipelines. But the agency and its critics disagree about the ruling’s ramifications.

FERC says the decision affects only a small set of pipelines with known end users, and doesn’t require broader climate analysis in most other cases. Environmental lawyers accuse FERC of dragging its feet and interpreting its legal obligations too narrowly.

Green groups tried to push the issue back to court in follow-up cases, with minor success: a panel of D.C. Circuit judges last year panned FERC’s climate review process as “decidedly less than dogged.” But the court hasn’t yet given a definitive answer on whether the commission’s narrow interpretation of the 2017 ruling passes muster.

In the meantime, “we are seeing agencies continue to rely on these really problematic arguments without really fully weighing the climate impacts of projects,” said Jason Schwartz, legal director for New York University’s Institute for Policy Integrity, which has advocated for broader reviews.

But “there’s still the potential out there that the D.C. Circuit does say more,” even with the Atlantic Coast pipeline case off the docket, said K&L Gates LLP attorney Sandra E. Safro, who represents gas shippers and liquefied natural gas project developers.

A FERC spokeswoman declined to discuss the issue, saying “we do not comment or speculate about proceedings before the courts.”

‘Every Single Pipe’

Energy and environmental lawyers are now focused on a burgeoning set of natural gas cases that could again put climate issues on the radar of a federal appeals court.

In litigation over the proposed PennEast pipeline—a project backed by Enbridge Inc., Southern Co., and other companies to ship gas across Pennsylvania and New Jersey—environmentalists argued FERC should have taken a broader look at climate impacts, including emissions associated with natural gas production that would supply the pipeline.

FERC defended itself, saying “the Commission correctly found that impacts related to upstream production, including greenhouse gas emissions, are not reasonably foreseeable” under the National Environmental Policy Act standard that governs what types of impacts agencies must study.

The PennEast case is poised for oral arguments before the D.C. Circuit. But proceedings have been delayed while the U.S. Supreme Court considers whether to take up a separate dispute about the pipeline.

Litigation over a Mountain Valley pipeline extension or liquefied natural gas terminals and related infrastructure in Texas, Oregon, and Alaska could also push climate questions back on federal judges’ radar.

And the issue is likely to come up more often after a separate D.C. Circuit decision made it easier for pipeline challengers to get to court, Giannetti said.

“Every single pipe is going to have these issues, no matter whether it’s five miles long or 600 miles long,” she said. “It’s just going to be a matter of degree.”

FERC’s Future

FERC commissioners themselves are feeding future cases, Sullivan & Worcester LLP attorney Jeffrey Karp said. He pointed to Democratic commission members’ recent history of issuing climate-focused dissents or concurrences on pipeline orders that give fodder to subsequent legal challenges.

“As long as there’s still a Democrat who’s going to push the issue, I don’t see how it’s not going to get up to the D.C. Circuit,” he said.

The bipartisan five-member commission has one Democrat—climate champion Richard Glick—and one vacancy on that side of the aisle. Earthjustice energy lawyer Aaron Stemplewicz noted the balance could shift and FERC could voluntarily conduct more robust climate reviews if a Democrat takes the White House in the 2020 election.

If Glick becomes the chairman, “I could see his dissents becoming the majority,” Safro, from K&L Gates LLP, said, referring to the commissioner’s repeated calls to colleagues to broaden FERC’s climate reviews.

“But even if there is not a change in administration or a change in the direction in which FERC is going on that issue,” Stemplewicz said, “there are cases out there that are going to square this up before a circuit court panel, and we’re going to get some more clarity on it.”

—With assistance from Alexandra Yetter.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergindustry.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergindustry.com; Rebecca Baker at rbaker@bloombergindustry.com

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