The climate crisis has reached a point of “code red for humanity.”1 Within the United States, disasters like heatwaves,2 wildfires,3 and hurricanes4 have worsened as greenhouse gas levels in the atmosphere have risen, and scientists expect this trend to continue.5 Despite the existential threat that the climate crisis poses, the Federal Energy Regulatory Commission (FERC), which has the authority to authorize natural gas facilities, has resisted taking a fulsome accounting of the implications that its authorization decisions have for the climate crisis.6 Recently, in Vecinos para el Bienestar de la Comunidad Costera v. FERC,7 the D.C. Circuit remanded authorization of two natural gas facilities to the Commission, ruling that it had insufficiently contextualized the impacts that the projects would have on the climate as part of its environmental impact statements (EISs).8 The decision signaled that FERC’s authorization procedures will continue to face judicial scrutiny as long as the Commission neglects to fully examine the climate impacts of its decisions.
In November 2019, FERC authorized the construction and operation of three liquefied natural gas (LNG) facilities in Cameron County, Texas: the Rio Grande terminal,9 the Annova terminal,10 and the Texas terminal.11 In the administrative proceedings to evaluate the applications, FERC found that approval of each of the three facilities was consistent with the Natural Gas Act,12 which requires that applications for the exportation of natural gas are not “inconsistent with the public interest”13 and that interstate natural gas pipelines satisfy the “public convenience and necessity.”14 Because approval of each facility constituted a “major Federal action,” the National Environmental Policy Act of 196915 (NEPA) required FERC to conduct EISs, which are comprehensive reports of the potential environmental implications of a project.16 With respect to the climate impact of the facilities, FERC, per Commission practice, quantified the greenhouse gas emissions that would result from the construction and operation of each facility but did not assess the impacts those emissions would have on climate change.17 Environmental organizations and community groups argued against the facilities in proceedings before the Commission, claiming that they would negatively impact local communities, raise natural gas prices, and exacerbate the climate crisis.18 Nevertheless, a majority of FERC Commissioners authorized each facility.19 Commissioner Glick vigorously dissented from all three orders.20
The environmental organizations and community groups filed requests for rehearing and stays of the proceedings, all of which FERC denied.21 The denials were similar to the initial orders, with the same two commissioners in the majority and Commissioner Glick again dissenting.22 Opponents of the facilities sought review of the Commission’s orders by the D.C. Circuit, and the projects’ proponents intervened as respondents.23
The D.C. Circuit remanded without vacatur.24 Writing for a unanimous panel, Judge Wilkins25 found the Commission’s analyses of the projects’ impacts on climate change and environmental justice communities26 to be arbitrary and capricious under NEPA and the Administrative Procedure Act27 (APA), and accordingly held that the Commission’s determinations of public interest under the Natural Gas Act were deficient.28
First discussing the Commission’s analysis of the projects’ greenhouse gas emissions, the panel found FERC’s determination that it was “unable to determine the significance of [each] Project’s contribution to climate change” to be arbitrary and capricious.29 NEPA requires agencies to take a “hard look”30 at the environmental consequences of “major Federal action[s]” through an EIS.31 The law does not require substantive outcomes, but procedurally deficient NEPA analyses are subject to the arbitrary and capricious standard of the APA.32 Here, the Commission had not given climate change the “hard look” NEPA demands. In particular, the panel found that FERC did not address whether 40 C.F.R. § 1502.21(c) compels the Commission to assess climate impacts in its EIS.33 The regulation requires agencies to use “theoretical approaches or research methods generally accepted in the scientific community” to evaluate impacts that cannot be measured directly.34 The panel found the regulation to be “applicable on its face,” and FERC therefore needed either to use a methodology to estimate those impacts or to explain why the regulation did not compel it to do so.35 Without that kind of explanation, its decision was arbitrary and capricious under the APA because it had not responded to “significant opposing viewpoints concerning” its NEPA analysis.36 The panel rejected FERC’s position that the Commission could not determine the climate impacts of individual projects’ greenhouse gas emissions.37 The D.C. Circuit had previously accepted this position in EarthReports, Inc. v. FERC,38 but distinguished EarthReports because the litigants in that case had not brought up § 1502.21(c).39 The panel accordingly remanded to the Commission with instructions to respond to the question of whether the regulation compels an assessment of the projects’ impacts on climate change.40
The panel also found that FERC’s environmental justice analyses as required by Executive Order 12,898 were not rationally connected to the Commission’s findings and therefore were arbitrary and capricious under NEPA and the APA.41 The Commission analyzed the projects’ impacts on only environmental justice communities within two miles of the project sites, but had determined that the environmental effects from the projects would extend much farther.42 The panel agreed with the petitioners that the Commission had offered no “rational connection between the facts found and the decision made” to limit the environmental justice analysis to a two-mile radius of the facilities and that the decision was therefore arbitrary.43
Because the Commission had relied on its deficient climate impacts and environmental justice analyses to support its finding that the facilities satisfied the “public interest” and “public convenience and necessity” requirements of the Natural Gas Act, the panel also instructed FERC to revisit its determination on those requirements.44 But importantly, because the panel found it likely both that FERC could “remedy any deficiencies in its orders on remand” and that “vacating the orders would needlessly disrupt completion of the projects,” the panel remanded without vacatur.45
In the past, FERC has limited the extent to which it considers the effects of its authorizations on the climate crisis, both in how it quantifies a project’s greenhouse gas emissions and in how it contextualizes the impacts of those emissions.46 Vecinos continues the D.C. Circuit’s trend of pushing back on the Commission’s reluctance to take a “hard look” at climate change,47 with the court pressing FERC to assess the impacts of the emissions resulting from the projects that it approves. Given recent political change at FERC, decisions like Vecinos can provide legal fodder for a motivated Democratic majority to update FERC’s policies to take a “harder look” at climate impacts. And even without political tailwinds, the decision could be strong enough on its own terms to compel FERC to use a framework like the social cost of carbon protocol to assess climate impacts.
FERC historically has not given serious consideration to the climate impacts of the natural gas infrastructure it approves.48 It is unequivocal that the combustion of natural gas emits greenhouse gases that drive the climate crisis.49 But FERC has limited the scope of the emissions impacts it considers, resisting examining projects’ “upstream and downstream emissions” in favor of examining only projects’ direct emissions.50 Additionally, FERC has refused, as it did in Vecinos, to contextualize those emissions’ impacts with a tool like the social cost of carbon.51 FERC’s limited consideration of emissions impacts has caused consternation among environmental groups52 and individual FERC commissioners alike.53
Litigants have challenged FERC’s approach to greenhouse gases in the D.C. Circuit with some success. First, litigants have challenged FERC’s policy of examining only direct emissions. For example, in Sierra Club v. FERC,54 the D.C. Circuit held that FERC must consider downstream emissions from natural gas pipelines or “explain in more detail why it cannot do so,” remanding (with vacatur) a pipeline authorization to the agency.55 Second, litigants have argued, as in Vecinos, that FERC’s policy of not contextualizing emissions impacts is unlawful.56 This approach has found success in other contexts, with one circuit noting that the costs of climate change are difficult to quantify but are “certainly not zero.”57 The D.C. Circuit, however, has generally been more solicitous of FERC’s arguments against contextualization of climate impacts.58 But even before Vecinos, the D.C. Circuit had signaled that its solicitude of FERC’s position was running thin; in Sierra Club, the court requested on remand that the Commission explain whether it still held the same position on the social cost of carbon protocol as it had in EarthReports (decided the year before).59
Vecinos fits the trend set by Sierra Club by continuing to push FERC to live up to its statutory mandates, and that trend may provide sympathetic FERC commissioners with legal fodder to change the Commission’s greenhouse gas procedures. To be sure, “the role of a court in reviewing” NEPA analyses “is a limited one,” and courts rarely mandate that an agency take a given course of action.60 Even still, judicial review of NEPA analyses can effectively shape agency behavior. In the past, getting “whacked in the head” with court losses has played a role in pushing FERC to consider more seriously the environmental implications of its decisions,61 and FERC has once again taken note of these judicial “whacks.” Now-Chairman Glick has argued that court decisions like Vecinos may legally mandate that FERC reconsider its treatment of climate impacts in its authorization decisions.62 FERC has an ongoing notice of inquiry into its process for approving natural gas pipelines, including “how the Commission addresses climate change.”63 Following Sierra Club and Vecinos, it seems like FERC will at least consider requiring itself to evaluate upstream and downstream emissions, as well as climate impacts. And political change at FERC might make it more likely that the Commission will use these decisions as a legal justification to update its greenhouse gas procedures: Democrats recently took control of FERC after President Biden appointed Democrat Commissioner Phillips to replace Republican Commissioner Chatterjee.64
But even if a new FERC majority is not politically predisposed to adopting a method to contextualize climate impacts, Vecinos could be strong enough on its own terms to force a change in FERC’s policies regardless. As the panel noted, the arguments FERC has made in the past to avoid using the social cost of carbon protocol did not speak to whether 40 C.F.R. § 1502.21(c) required its use.65 The regulation reasonably could compel FERC to contextualize the projects’ effects on climate change using a “generally accepted” approach like the protocol.66 The social cost of carbon protocol is not without its critics,67 but it has been generally accepted by scientific authorities and government agencies alike.68 Therefore, even absent political motivations, Vecinos could compel FERC to adopt a framework to contextualize climate impacts and take a harder look at the climate implications of the projects it approves.
The holding in Vecinos was limited on its face: the panel merely remanded the case with directions for FERC to consider on review.69 By remanding without vacatur, the panel found it “reasonably likely” that these facilities would again pass legal muster.70 But such a result is not inevitable, especially in light of a string of recent D.C. Circuit decisions challenging FERC’s treatment of greenhouse gases.71 And even if FERC does again authorize these specific facilities, Vecinos signals that the Commission’s greenhouse gas analyses will continue to face judicial scrutiny until its policies are in line with its statutory mandates.