Sierra Club v. Federal Energy Regulatory Commission
867 F.3d 1357
| D.C. Cir. | 2017Background
- FERC approved certificates under NGA §7 for three linked pipelines (Sabal Trail, Hillabee Expansion, Florida Southeast Connection) to deliver ~1.1 billion cubic feet/day to meet Florida utilities’ demand; construction began before rehearing denial.
- Petitioners: Sierra Club (environmental groups) and Georgia landowners (GBA Associates, Isaacs) challenged FERC’s EIS as inadequate under NEPA and raised rate-setting and procedural claims.
- FERC prepared a single EIS, held public comment, and adopted mitigation/route adjustments (including compressor relocation) but did not quantify downstream greenhouse-gas (GHG) emissions from burning transported gas.
- The court considered standing, severability of the unified certificate order, and whether FERC must analyze indirect (downstream) GHG emissions and environmental-justice/cumulative impacts.
- Holding (majority): remand for a conforming EIS because FERC failed to quantify or adequately explain inability to quantify reasonably foreseeable downstream power-plant GHG emissions; other NEPA, procedural, and rate-setting challenges largely rejected.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether petitioners have standing and whether the Certificate Order is severable | Sierra Club and landowners alleged concrete environmental and property injuries tied to Sabal Trail; sought vacatur of whole order | Respondents argued limited standing re: specific segments and that portions are severable | Court: petitioners have standing; Order not severable because FERC treated project as single integrated proposal — whole order review allowed |
| Adequacy of environmental-justice and cumulative-impact analysis in EIS | Sierra Club: EIS failed to analyze disproportionate impacts and cumulative pollution burden (e.g., Dougherty County) | FERC: conducted EJ analysis, compared alternatives, considered relocation and mitigation, projected pollutant levels below standards | Held: FERC’s EJ and cumulative-impact discussion met NEPA’s rule-of-reason; no reversal on EJ claims |
| Whether FERC had to analyze/quantify downstream GHG emissions from power plants burning transported gas | Sierra Club: downstream combustion emissions are reasonably foreseeable and legally relevant; EIS should quantify emissions (or explain why not) and assess significance | Pipeline developers/FERC: downstream emissions are not legally attributable to FERC (citing Public Citizen/Freeport); uncertain and speculative to quantify | Held: Majority — downstream GHG emissions are reasonably foreseeable and FERC had authority to weigh them; EIS must quantify or explain why quantification is infeasible; remand required. (Concurring/dissent would have denied review on this point because Florida siting authority breaks causal chain.) |
| Validity of FERC’s use of a hypothetical capital structure in initial rate determination | Sierra Club: rejecting actual proposed structure and allowing a hypothetical one to justify a high ROE is improper | FERC: may use hypothetical capital structure to align risk/reward and protect consumers; similar precedent exists | Held: FERC’s use of a hypothetical 50/50 capital structure to justify ROE was not arbitrary or capricious on the arguments presented; rate challenge denied |
Key Cases Cited
- Department of Transportation v. Public Citizen, 541 U.S. 752 (2004) (NEPA causation/proximate-cause principle limiting required analysis where agency cannot prevent downstream effect)
- Balt. Gas & Elec. Co. v. Nat. Res. Def. Council, 462 U.S. 87 (1983) (NEPA requires agencies to take a "hard look" and disclose environmental effects)
- Sierra Club v. FERC (Freeport), 827 F.3d 36 (D.C. Cir. 2016) (FERC need not analyze downstream export emissions when DOE had sole licensing authority)
- EarthReports, Inc. v. FERC, 828 F.3d 949 (D.C. Cir. 2016) (similar to Freeport on FERC’s NEPA obligations regarding LNG exports)
- WildEarth Guardians v. Jewell, 738 F.3d 298 (D.C. Cir. 2013) (NEPA’s requirements for reasonable forecasting and use of emission estimates as proxies)
- Nevada v. Dep’t of Energy, 457 F.3d 78 (D.C. Cir. 2006) (NEPA’s rule-of-reason; courts should not "flyspeck" EIS)
- Del. Riverkeeper Network v. FERC, 753 F.3d 1304 (D.C. Cir. 2014) (scope of NEPA "hard look" and forecasting)
- Nat’l Consumers Util. Comm’n v. FERC, 42 F.3d 659 (D.C. Cir. 1994) (rate-setting principles; use of capital structure in FERC ratemaking)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary-and-capricious standard for agency decisionmaking)