Sierra Club v. FERCSierra Club v. FERC
Spencer Gall argued the cause for petitioners. With him on the briefs was Delaney King.
J. Houston Shaner, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With him on the brief were Matthew R. Christiansen, General Counsel, at the time the brief was filed, and Robert H. Solomon, Solicitor.
David A. Super argued the cause for intervenors in support of respondent. With him on the brief were David D. Ayliffe, Brian D. O‘Neill, Michael R. Pincus, Kevin A. Ewing, Ann D. Navaro, and John P. Coyle.
Before: PILLARD, KATSAS and WALKER, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALKER, with whom Circuit Judge PILLARD joins except as to Parts II.B.3.a and III.
WALKER, Circuit Judge:
“The bedrock principle of judicial review in NEPA cases can be stated in a word: Deference.”1
The Tennessee Valley Authority decided to replace a coal-fired power unit with a natural-gas turbine. That swap will significantly reduce greenhouse gas emissions. But the Sierra Club contends that environmental laws call for more.2 So it sued to pause the TVA’s plans.3
Because FERC’s approval is consistent with NEPA, the Natural Gas Act, and related regulations, we deny the petitions.
I. Background
A. Upgrading the Cumberland Fossil Plant
The Tennessee Valley Authority is a federal agency charged with leveraging “the resources of the Tennessee Valley region” to “make life better for the people who call it home.” About TVA, https://perma.cc/XES6-FMWV. The TVA is required to “produce, distribute, and sell electric power” “at the lowest system cost,” which includes the cost of “environmental compliance.”
Several years ago, the TVA decided to retire the Cumberland facility’s two coal-fired units. It will replace one of the coal-fired units with a natural-gas turbine. To provide the new turbine with a steady supply of gas, the Tennessee Gas Pipeline Company plans to build a 32-mile pipeline.
B. Statutory Framework
1. National Environmental Policy Act
The National Environmental Policy Act requires agencies to prepare an environmental impact statement when they approve a “major Federal action[] significantly affecting the quality of the human environment.”
However, “NEPA imposes no substantive environmental obligations or restrictions.” Seven County Infrastructure Coalition v. Eagle County, Colorado, 145 S. Ct. 1497, 1507 (2025). As “a purely procedural statute,” “NEPA does not require the agency to weigh environmental consequences in any particular way. Rather, an agency may weigh environmental consequences as the agency reasonably sees fit under its governing statute and any relevant substantive environmental laws.” Id.
2. Natural Gas Act
The Natural Gas Act regulates “the business of transporting and selling natural gas for ultimate distribution to the public.”
Before issuing a certificate, FERC must confirm that the proposed project will not require subsidization from existing natural-gas customers. Minisink, 762 F.3d at 101. This is called “market need.” FERC must also balance the project’s benefits and harms. Id. That analysis includes “all factors bearing on the public interest, including environmental ones.” Food & Water Watch v. FERC, 104 F.4th 336, 341 (D.C. Cir. 2024) (cleaned up).
C. FERC Proceedings
In January 2024, FERC issued a certificate of public convenience and necessity for Tennessee Gas’s 32-mile pipeline. That decision rested on two main conclusions:
- First, market need was established by the TVA’s promise to buy 100% of the pipeline’s capacity for 20 years.
- Second, the pipeline’s benefits outweigh its harms. FERC’s 576-page environmental impact statement explained that most environmental effects will be less than significant.4 FERC also noted that the new natural-gas turbine will emit less greenhouse gas than the coal-fired unit that it will replace, resulting in a net emissions reduction. Reasoning that the pipeline will enable the operation of the new turbine, FERC credited the pipeline for the reduction in net emissions.5
The Sierra Club petitioned this court for review. It argues that FERC violated NEPA and the Natural Gas Act.
II. Analysis
The Sierra Club’s petitions are meritless.
A. Standard of Review
The Administrative Procedure Act tells courts how to review an agency’s legal interpretations and policy choices. “As a general matter, when an agency interprets a statute, judicial review of the agency’s interpretation is de novo.” Seven County, 145 S. Ct. at 1511 (citing Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244, 2261 (2024)). “But when an agency exercises discretion granted by a statute, judicial review is typically conducted under the Administrative Procedure Act’s deferential arbitrary-and-capricious standard.” Id.; see
When conducting arbitrary-and-capricious review, “a court asks not whether it agrees with the agency decision, but rather only whether the agency action was reasonable and reasonably explained.” Seven County, 145 S. Ct. at 1511 (citing FCC v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021); Motor Vehicle Manufacturers Association of the United States, Inc. v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43 (1983)).
Yet this court’s “precedent applying NEPA,” id. at 1510, has sometimes applied a more probing review in conflict with NEPA’s “statutory text and common sense,” id. at 1514. That led to a recent “course correction,” id., directed by the Supreme Court in Seven County Infrastructure Coalition v. Eagle County, Colorado. It reaffirmed that “NEPA does not authorize a court to interject itself within the area of discretion as to the choice of the action to be taken by the agency.” Id. (cleaned up). Instead, “[c]ourts should afford substantial deference and should not micromanage those agency choices so long as they fall within a broad zone of reasonableness.” Id. at 1513.
In other words, NEPA does not require an agency to make the decision that the reviewing judges “would have reached had they been members of the decisionmaking unit of the agency.” Id. (quoting Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 558 (1978)). Rather, the “role of a court in reviewing the sufficiency of an agency’s consideration of environmental factors is a limited one. The bedrock principle of judicial review in NEPA cases can be stated in a word: Deference.” Id. at 1514-15 (cleaned up).
Under the Natural Gas Act, we “review FERC’s public convenience and necessity determination for whether it was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” Citizens Action Coalition of Indiana, Inc. v. FERC, 125 F.4th 229, 236-37 (D.C. Cir. 2025) (cleaned up). While we “cannot substitute our judgment for that of the Commission,” we must nonetheless ensure “that the Commission’s decisionmaking is reasoned, principled, and based upon the record.” Minisink Residents for Environmental Preservation and Safety v. FERC, 762 F.3d 97, 106 (D.C. Cir. 2014) (cleaned up). That standard reflects the APA’s deferential standard of review and the Natural Gas Act’s policy decision “to encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.” NAACP v. Federal Power Commission, 425 U.S. 662, 670 (1976), while keeping “environmental and conservation factors in mind,” Public Utilities Commission of California v. FERC, 900 F.2d 269, 281 (D.C. Cir. 1990).
B. FERC Complied with NEPA
The Sierra Club challenges (1) FERC’s calculation of downstream greenhouse gas emissions, (2) FERC’s discussion of the no-action alternative, and (3) FERC’s decision not to analyze the pipeline and power plant together as connected actions.
1. Emissions Analysis
The Sierra Club challenges FERC’s downstream emissions analysis in three ways. One way or another, these challenges overlook the “Deference” that is a “bedrock principle of judicial review in NEPA cases.” See Seven County, 145 S. Ct. at 1515.
First, the Sierra Club says FERC incorrectly credited the pipeline with enabling the emissions reduction from the gas-for-coal swap. The Sierra Club believes that the TVA will retire the coal-fired unit regardless of whether it builds the gas turbine or FERC approves the pipeline project, so the retirement of the
But the Sierra Club’s belief is unfounded. The TVA said that absent a replacement generation source, it “would need to continue operating the coal-fired units.” JA 417. And FERC explained that the Cumberland pipeline was essential to the anticipated gas-for-coal swap because it would “serve TVA’s need for firm natural gas transportation capacity” to the new gas plant. JA 79. So FERC did not err when it considered both the retirement of the coal-powered unit and the emissions from the new gas turbine as effects of the pipeline for its downstream emissions analysis.
Circuit precedent supports that decision. Cf. Citizens Action Coalition of Indiana, 125 F.4th at 243 (finding no Natural Gas Act violation from FERC’s decision to credit a proposed gas pipeline with net emissions reductions associated with the retirement of coal-fired units in favor of new gas turbines). And economic logic compels it: If the TVA retires its coal-fired unit without a replacement gas turbine or an adequate gas supply, the TVA cannot adequately supply electricity to its customers. See JA 365. We do not require FERC to “blind itself to this practical reality.” Citizens Action Coalition, 125 F.4th at 243.
Second, the Sierra Club alternatively argues that “even if FERC could lawfully credit the Project with some emissions reductions associated with the retirement of the Cumberland Fossil Plant, the record could not support emissions offsets beyond 2035” — the latest year the coal-fired units will operate. Pet’r Br. 30. Thus, the Sierra Club says that “FERC ignored at least ten years of emissions from the Cumberland Gas Plant — from 2036 through 2045 — that could not be netted out.” Pet’r Br. 34.
But again, the TVA’s plans to retire the coal-fired unit do not exist in a vacuum. Without a replacement generation source with requisite fuel, the TVA might instead upgrade and operate the coal-fired unit well into the future, as the TVA’s no-action alternative contemplated. So even though the TVA hopes to replace its coal-fired units by 2035, FERC made the reasonable choice to credit the pipeline with a net emissions reduction covering the entire forecast period.
Could FERC have taken a different approach? Perhaps. But we must “defer to agencies’ decisions about where to draw the line” in their analyses of “indirect environmental effects.” Seven County, 145 S. Ct. at 1513.
Third, the Sierra Club faults FERC for presenting estimates of emissions on an annualized basis, rather than on a cumulative basis. But it doesn’t matter which way FERC presented the estimates. Anyone with a calculator — or the ability to perform basic addition — can convert the annualized estimates into a cumulative estimate, as the Sierra Club did in its brief. See Pet’r Br. 35. FERC’s failure to do so itself did not “frustrate[]” NEPA’s “goal of ensuring that relevant information is available to those participating in agency decision-making” and was therefore, at worst, “harmless error.” Nevada v. Department of Energy, 457 F.3d 78, 90 (D.C. Cir. 2006).
2. No-Action Alternative
Recall that the TVA’s gas turbine will emit less greenhouse gas than the coal-fired unit it will replace. And recall that FERC decided to consider those net reductions as a benefit of the pipeline project. The Sierra Club says that decision is inconsistent with the analysis in FERC’s “no action alternative,” in which FERC assumed that the natural-gas turbine
We disagree with the Sierra Club. To start, its logic would require us to hold that FERC should not have attributed to the pipeline any of the plant-specific emissions from TVA’s gas-for-coal swap — neither the emissions from the gas turbine nor the credit from retiring the coal plant. But the Sierra Club elsewhere asserts, to the contrary, that downstream gas-plant emissions are caused by the pipeline. See Pet’r Br. 27-28; Reply Br. 10-11. That position essentially concedes that there is no inconsistency between FERC’s analysis of the no-action alternative and its attribution of downstream emissions effects to the pipeline.
It was also reasonable for FERC to assume that even if it did not certify Tennessee Gas’s proposed pipeline — in which case this pipeline would “not be constructed, the potential impacts from the Proposed Action would not occur, and the Project’s objectives would not be met,” JA 190 — another pipeline could still be proposed, certified, and built. See JA 237. That other pipeline would allow the TVA to retire its coal-fired units and replace a coal-fired unit with a gas turbine.
So understood, there is no tension between the no-action alternative and FERC’s judgment that the net emissions reduction is an indirect effect of the pipeline. The two are separate inquiries: the former establishes the baseline for comparing “reasonable alternatives” to the project,
Perhaps FERC’s no-action analysis could have been clearer about its assumption that if the TVA decides to build its gas turbine, some pipeline will be certified to supply it with gas. But “a reviewing court must be at its most deferential” when an agency makes “speculative assessments or predictive or scientific judgments” about alternatives. Seven County, 145 S. Ct. at 1512 (emphasis added) (cleaned up). So we cannot fault FERC for reasonably assuming that the gas turbine will be built even if this particular pipeline is rejected.6
3. Connected-Action Requirement
The Sierra Club next argues that the pipeline and the TVA’s power plant should have been analyzed together as connected actions.
a. FERC Did Not Err
Under regulations issued by the Council on Environmental Quality and adopted by FERC, federal actions that “are closely related . . . should be discussed in the same impact statement.”
The Sierra Club’s argument fails because it asks us to demand exactly what Seven County says we cannot demand. FERC lacks “jurisdiction . . . over facilities used for the generation of electric energy” — like the TVA’s power plant.
b. Even Assuming Error, It Was Harmless
Even if the connected-action requirement did apply, we would not vacate
The Sierra Club also argues that if FERC and the TVA had conducted a joint environmental impact statement, FERC could have avoided its initial confusion as to the number of coal-fired units the gas turbine would replace. Maybe so. But that error was harmless because FERC corrected it in the rehearing order.
Finally, the Sierra Club contends that by combining the two environmental impact statements, FERC might have avoided the alleged errors related to its no-action analysis. But as already discussed, that analysis was reasonable.
C. FERC Complied with the Natural Gas Act
FERC complied with the Natural Gas Act when it analyzed the market need for the pipeline and the public interest.
1. Market Need Analysis
Before certifying a pipeline, FERC must confirm a market need by evaluating “whether the project can proceed without subsidies from the existing pipeline’s customers.” Minisink, 762 F.3d at 101 (cleaned up). Here, FERC determined that there was a market need for the project because the TVA entered into a 20-year precedent agreement with Tennessee Gas to purchase 100% of the pipeline’s capacity.8
As a general rule, FERC may find market need by relying solely on a precedent agreement. Minisink, 762 F.3d at 111 n.10. There is an exception to that rule when an agreement involves affiliated entities and there is “plausible evidence of self-dealing.” Environmental Defense Fund v. FERC, 2 F.4th 953, 975 (D.C. Cir. 2021). But the TVA and Tennessee Gas are not affiliated, and the Sierra Club has not alleged self-dealing. So that exception does not apply.
Instead, the Sierra Club argues that FERC should have more thoroughly scrutinized the market need because the TVA is an “unregulated utility” that is “not
We disagree. Though the TVA is not subject to state supervision, it is hardly a rogue entity. The TVA must follow a statutorily prescribed “least-cost planning” framework in making investment decisions; it is subject to congressional oversight and must annually notify Congress of any “major new energy resource”; and its investment decisions are subject to public notice and comment.
We also reject the Sierra Club’s argument that FERC ignored evidence about green-energy subsidies available under the Inflation Reduction Act. Once again, absent self-dealing, FERC was entitled to rely on the precedent agreement without considering additional evidence. And even if there had been a need for FERC to look beyond the precedent agreement, FERC had no obligation to consider information about the TVA’s choice of natural gas over a renewable alternative. See
2. Public Interest Balancing
Finally, the Sierra Club argues that FERC improperly weighed the pipeline’s benefits and harms because it misunderstood the pipeline’s environmental impacts and failed to consider whether non-gas generation methods might result in lower costs for energy consumers. This argument simply repeats objections that we have already considered and rejected. FERC’s environmental assessment was adequate. And while FERC’s power under § 7 of the Natural Gas Act permits it “to look into matters excluded from [its] direct regulatory jurisdiction,” it may not purport[] to regulate” matters outside that jurisdiction. Office of Consumers’ Counsel v. FERC, 655 F.2d 1132, 1146 n.31, 1147-48 (D.C. Cir. 1980); see Federal Power Commission v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 7-9, 17, 20 (1961). FERC generally has no jurisdiction “over facilities used for the generation of electric energy.”
III. Conclusion
NEPA requires federal agencies to prepare environmental impact statements for “major Federal actions significantly affecting the quality of the human environment.”
At oral argument, we asked the Sierra Club if any of those environmental impact statements were legally adequate. It could not identify one. Cf. Appalachian Voices v. FERC, 139 F.4th 903, 916 (D.C. Cir. 2025) (denying the Sierra Club’s petition); Healthy Gulf v. FERC, 132 F.4th 544, 555 (D.C. Cir. 2025) (same); Center for Biological Diversity v. FERC, 67 F.4th 1176, 1188 (D.C. Cir. 2023) (same); Sierra Club v. FERC, 38 F.4th 220, 235 (D.C. Cir. 2022) (same); Sierra Club v. FERC, 672 F. App’x 38, 39 (D.C. Cir. 2016) (same).
After Seven County was decided, the Sierra Club informed this court that though “it may apply in other cases, Seven County has little utility here.” Sierra Club Rule 28(j) Letter at 1 (June 6, 2025). That is incorrect. The Sierra Club’s briefing depended on circuit precedent abrogated by Seven County, including this court’s decision in Sabal Trail, which the Sierra Club cited on pages 19, 26, 27, 29, 36, and 46 of its opening brief. Compare Seven County, 145 S. Ct. at 1516 (“agencies are not required to analyze the effects of projects over which they do not exercise regulatory authority”), with Sierra Club v. FERC (Sabal Trail), 867 F.3d 1357, 1371 (D.C. Cir. 2017) (requiring FERC to consider “power-plant carbon emissions that the pipelines will make possible” even though FERC lacks regulatory jurisdiction over power generation facilities).
After Seven County, the era of searching NEPA review is over — or at least it should be.
* * *
Because FERC reasonably discharged its NEPA and Natural Gas Act duties, we deny the Sierra Club’s petitions.
So ordered.