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Power & Pipes

FERC, CFTC, and State Energy Law Developments

Concurring and dissenting statements issued with the Federal Energy Regulatory Commission’s (FERC’s) February 21 order granting construction and operating authorization for a liquefied natural gas (LNG) export terminal highlight the increased scrutiny that gas construction projects are receiving concerning their potential effects on climate change. Despite misgivings from some Commissioners, FERC issued a 3-1 decision conditionally authorizing the construction and operation of the Calcasieu Pass Terminal and TransCameron Pipeline Project (Project), an LNG export terminal and an associated lateral pipeline project that will be located along the Calcasieu Ship Channel in Cameron Parish, Louisiana. The decision found that FERC Staff’s quantitative and qualitative assessments of greenhouse gas (GHG) emissions impacting the climate on a regional and global scale were sufficient.[1] However, even if FERC would like to use the decision as a blueprint to greenlight similarly stalled or pending terminal construction and expansion projects, it is unclear whether appellate courts might have the appetite to agree in analogous cases.

The contentious issue highlighted by Commissioners Cheryl LaFleur and Richard Glick in the Project’s authorization concerned how FERC can demonstrate that it has adequately assessed the direct impacts on the environment pursuant to the National Environmental Policy Act (NEPA).[2] In its authorization, the Commission indicated that the Project’s Final Environmental Impact Statement properly quantified GHG emissions, showing that “direct operational emissions of the LNG terminal could potentially increase [carbon dioxide] equivalent emissions based on the 2016 levels by 0.07 [percent] at the national level.”[3] Qualitatively, the authorization order explained that the Project will contribute incrementally to climate change, but stated that it could not determine whether that contribution, or the resulting harm, would be significant. In doing so, the authorization order referenced a decision where the Commission stated that it would limit its analysis of certain indirect downstream impacts of jurisdictional gas facilities; that proceeding is itself currently winding its way through the US Court of Appeals for the DC Circuit.[4]

Despite the authorization, Commissioners LaFleur’s and Glick’s concerns about the Calcasieu Pass Terminal facilities assessment could be used to support arguments posed by those challenging FERC gas industry construction authorizations. For example, in her concurrence, Commissioner LaFleur viewed the Commission’s analysis as only the “first step” to assist FERC in “ascribing significance to a given rate or volume of GHG emissions as part of [FERC’s] climate change analysis,”[5] and suggested that she would like the Commission to use a more concrete framework for making a significance determination. Commissioner LaFleur also expressed dissatisfaction with FERC’s cumulative impact analysis to the extent that it did not address the cumulative potential for direct GHG emissions resulting from the Project in conjunction with surrounding facilities. Ultimately, however, Commissioner LaFleur voted to greenlight the Project.

Commissioner Glick was less forgiving, stating that “[n]either the NGA nor NEPA permit the Commission to assume away the climate change implications of constructing and operating an LNG facility that will directly emit large volumes of greenhouse gas emissions. Yet that is precisely what is happening today.”[6] His dissent provides an argument that the Commission’s decision “entirely sidesteps” the question of whether the Project’s contribution to climate change is significant, possibly in violation of federal review statutes. The statements issued alongside the Project’s authorization demonstrate that climate change impacts resulting from construction and operation of facilities similar to those authorized in the Calcasieu Pass Terminal proceeding will continue to be a contentious issue at all levels of court review, and is one that should be closely examined when pursuing business opportunities in the gas market.

[1] Venture Global Calcasieu Pass, LLC et al., Order Granting Authorizations Under Sections 3 and 7 of the Natural Gas Act, 166 FERC ¶ 61,144 (Feb. 21, 2019).

[2] Commissioner LaFleur issued a concurrence alongside the authorization, and Commissioner Glick issued a dissent. Id.

[3] 166 FERC ¶ 61,144 at P 112.

[4] See Otsego 2000, Inc., et al. v. FERC, Case No. 18-1188 (D.C. Cir.).

[5] Venture Global Calcasieu Pass, LLC et al., 166 FERC ¶ 61,144, P 6 (LaFleur, concurring).

[6] Id. at P 1 (Glick, dissenting).