On Tuesday, May 16, 2023, the D.C. Circuit denied in part and dismissed in part a petition for review filed by environmental groups, the Center for Biological Diversity, and the Sierra Club (collectively, “Petitioners”). Ctr. for Biological Diversity v. FERC, D.C. Cir., No. 20-01379, 5/26/2023. The petition sought a review of the Federal Energy Regulatory Commission’s (“FERC”) approval of a controversial $39 billion liquefied natural gas (“LNG”) project in Alaska.
This Alaska LNG project would build liquefaction facilities on the Kenai Peninsula to uptake gas and ready it for transportation through an 807-mile pipeline. A pipeline that can transport up to 3.9 billion cubic feet of gas daily to the plant.
According to the Petitioners, FERC’s approval of the project and its associated environmental impact statement violated the National Environmental Policy Act (“NEPA”), which requires agencies to “take a hard look at the environmental consequences before taking a major action.” Petitioners raised two central challenges to FERC’s decision: (1) the ruling erroneously failed to comply with NEPA, and (2) FERC’s substantive decision to authorize the LNG project was arbitrary and failed to satisfy the Natural Gas Act (“NGA”).
Concerning their first challenge, Petitioners asserted five arguments in support: (1) FERC failed to comply with NEPA because it inadequately considered alternatives to the LNG project; (2) FERC acted arbitrarily and contrary to law by refusing to employ the “social cost of carbon” metric to estimate the significance of the project’s direct emissions of greenhouse gases; (3) FERC failed to consider the project’s indirect greenhouse gas emissions; (4) FERC failed to adequately consider the impact of the project on the endangered Cook Inlet beluga whales; and (5) FERC’s evaluation of the project’s impacts on the wetlands was arbitrary and capricious.
The three-judge panel rejected all of the Petitioners’ arguments. First, the Court ruled it lacked jurisdiction to consider the Petitioners’ challenge regarding the “social cost of carbon” because the groups’ rehearing petition did not raise that issue. While the Petitioners discussed the social cost of carbon in their petition, they did not root their argument in the proper regulation, 40 C.F.R. § 1502.22. The panel noted the Petitioners only cited the regulation one time, in a “see, e.g.,” citation, which was not sufficient to put FERC on notice of the applicability of 40 C.F.R. § 1502.22, nor was it enough to properly raise the argument before the Circuit.
Next, the panel ruled FERC adequately considered reasonable alternatives but rejected them because they wouldn’t have furthered the project’s purpose or reduced environmental impacts. The Court also determined Petitioners’ remaining arguments failed because FERC’s decision not to consider the indirect effects of Alaska-bound gas was lawful, FERC adequately considered how noises and ship traffic might harm the endangered beluga whales, and how the construction of the liquefaction facilities could impact wetlands.
What’s more, the Court reasoned that under FERC’s delegated authority, it “‘shall issue’ authorization for LNG facilities ‘unless’ it determines doing so ‘will not be consistent with the public interest.’” Thus, FERC’s approval of the LNG project comported with the NGA because the agency concluded the project was in the public interest due to its substantial economic and commercial benefits, which outweighed any projected environmental impacts. The Circuit concluded its opinion by noting, “[i]n approving the Alaska Liquid Natural Gas Project, the Commission complied with the NGA, NEPA and the APA.” In sum, while the Petitioners “may disagree with the [FERC]’s policy choice to approve the Project, … the Commission comported with its regulatory obligations.”