Bias v. NEPA: What if Informational Tools are Futile?

A letter to Congress signed by 180+ environmental organizations raises an age-old question about NEPA: what if no one at the agency cares?

As we’ve written up at the Lab before, the Federal Energy Regulatory Commission (FERC) plays an absolutely vital role in permitting and governing the nation’s energy infrastructure.  And that vests it with a leading role in the nation’s fossil fuel future.  This has not been lost on the environmental groups that keep challenging FERC’s decisions lately.  One after another, local environmental groups have been challenging FERC decisions to permit pipeline expansions, upgrades, and gas export terminals, often making climate change arguments of various stripes in the process.

This time, the Delaware Riverkeeper Network (DRN) has taken the lead in a letter to Congress that has some in the gas industry on alert.  As Philadelphia’s Legal Intelligencer reports, it was DRN’s experience with the Marcellus pipeline boom that has drawn them into constant contact with FERC—most recently in a lawsuit alleging irremediable bias in favor of approving pipelines.

That DRN suit alleges that FERC hasn’t rejected a pipeline project proposal since 1986!  And their argument is simple: FERC is literally funded by approving pipelines (which is, indirectly at least, true).  The lawsuit, which alleges that set-up is a denial of due process to anyone challenging a pipeline proposal before the agency, is a long shot (to say the least and for many reasons).  But the letter to Senators Lisa Murkowski (R-Alaska) and Maria Cantwell (D-Wash.) and their House counterparts may be another matter.  The politics of FERC reform have at least some chance of aligning after November’s election but before the 115th Congress is seated.

As the reporting by State Impact and NPR emphasized earlier this year, FERC will even tell you flat out—as it did Congress in its 2017 budget request—that the agency recovers the full cost of its operations “through annual charges and filing fees assessed on the industries it regulates” pursuant to the Natural Gas Act and the Federal Power Act (as amended by the 2005 Energy Policy Act).  Think of how that frees FERC from having even to consider Congress’s opinions of its work—let alone the opinions of affected (but diffuse) interests like those of everyday people.

The natural gas industry isn’t taking this letter lightly—not with all the ‘reform-FERC’ legislative proposals in the hopper lately.  As the industry source Natural Gas Intel reports,

The Senate agreed, in a voice vote, to conference with House lawmakers on S. 2012, also known as the Energy Policy Modernization Act of 2015. Versions of the bill (S. 2012) passed the Senate on an 85-12 vote in April, and the House by a 241-178 vote in May. The Senate and House agreed in July to conference in an effort to reconcile differences between two versions of an omnibus energy bill.

This post asks whether NEPA and NEPA reviews do any good at all at an agency that is structurally—and perhaps culturally—predisposed in favor of building more and better fossil fuel infrastructure.

FERC Authority: Broad and Deep

As the Supreme Court confirmed last Term, FERC has plenty of authority (if it wanted to) to transform our electrical grid and, in the process, ease fossil fuels out of our future.  See FERC v. Electric Power Supply Ass’n, 136 S. Ct. 760 (2016).  As has been argued at length by Professor Joel Eisen (among others), FERC’s authorizing legislation—particularly, the Federal Power Act—vests it with almost unparalleled discretion to regulate “practices” that affect rates in wholesale electricity markets.  Power, in other words, encompassing virtually anything standing between us and the “smart” grid of tomorrow.

That’s before we reach the Natural Gas Act and the broad discretion FERC possesses over the permitting (licensing) and operation of pipelines, terminals and their related infrastructure.  The “revolution” of the grid by ultra-cheap natural gas which has been unfolding for almost a decade now threatens to turn that fuel into another superhighway rather than the ‘off-ramp’ from fossil fuels it is routinely billed as by energy experts.

This is where NEPA comes in.  In one sense, it is ironic that FERC’s creation in 1977 was due in part to its predecessors’ utter disregard for the environmental costs of their choices.  Because it is only through the Council on Environmental Quality’s (CEQ) regulations, issued to executive branch agencies under President Carter’s order in 1977 that they follow those regulations, that most agencies like FERC have successfully integrated NEPA’s mandates into their own.  When Congress created FERC as an “independent” agency, though, it gave FERC an out: many lawyers still believe that FERC isn’t truly bound by CEQ’s interpretations of NEPA.  Yet FERC, through its 1987 “Order 486,” agreed “voluntarily” to follow CEQ’s regulations.  Interestingly, as CEQ’s interpretations of those rules have moved climate change considerations to the fore, it is this ‘voluntary’ compliance by FERC that is becoming of overriding importance.

FERC’s Bias Against Considering Greenhouse Gases

As an exemplary student piece in the Georgetown International Environmental Law Review last year argued (if not in so many words), FERC’s experience with “upstream” and “downstream” effects analysis is shallow-to-nonexistent today.  That’s because FERC has has worked quietly but diligently to exclude such effects from its NEPA documents.  Even FERC’s predecessor, the Federal Power Commission, tried to avoid analyzing upstream and downstream effects of its decisions—and was sternly rebuffed in that effort by the D.C. Circuit.  See Henry v. Federal Power Comm’n, 513 F.2d 395, 406-07 (D.C. Cir. 1975).  Unfortunately, courts today have mostly deferred to FERC’s “scoping” decisions, and that is a growing problem.

Quite possibly the worst risk, even worse than attitudinal biases, in having an agency’s applicants do the environmental assessment in the first instance (which the agency then uses to complete its own) is that those environmental reviews will be very narrowly focused.  A site-focused approach to environmental assessment will often miss the forest for its trees.  This deficit can be remedied in other ways, but with fossil fuel infrastructure licensing decisions today, it is not.  The metaphorical forest here is locking in more GHG emissions that will continue to run up our cumulative carbon debt. And for all we know, that debt is one without good cancellation options down the line.  This is the takeaway from work like that done by Davis & Socolow.  See Steven J. Davis & Robert H. Socolow, Commitment Accounting of CO2 Emissions, 9 Environ. Res. Lett. 084018 (2014).

(This is putting aside the worry that, when both applicants and agency are relying on the same consultants to do these analyses, real conflicts of interest can arise.)

Getting Serious About NEPA @ FERCferc_seal

FERC proposed to overhaul its NEPA process guidance manual at the end of 2015.  This isn’t the space for a comprehensive critique of the proposal, but a few things are worth mentioning.

First, FERC’s list of actions that are “categorically” excluded from NEPA reviews under its rules includes over three dozen broadly worded categories of actions—many of which have significant impact on the nation’s energy markets.  None of that impact on energy markets is listed a reason to sweep a proposal back into NEPA procedures, though, and that is simply an agency choosing not to care about bending the curve on GHG emissions.

Second, as FERC’s “appendix” to its NEPA regulations lays out in detail, FERC believes that NEPA documents prepared for Natural Gas Act projects (like pipelines and export terminals) should examine issues such as water use and quality, wildlife, soils, noise and air quality—at the site in question.  Those “resource reports” are required of applicants.  See 18 C.F.R. § 380.12(c) (2015).

Yet, as mentioned above, an agency that taps its applicants to do the lion’s share of the work on NEPA documents is probably predisposed toward a site-specific, project-focused approach to environmental assessment.  We cannot afford that with FERC any longer, though.  We cannot afford to allow FERC to ignores the GHG implications of building grand export terminals while the courts keep deferring to those choices in basic administrative law inertia.  See, e.g., Sierra Club v. FERC, 827 F.3d 59 (D.C. Cir. 2016); Coalition for Responsible Growth v. FERC, 485 Fed. App’x 472 (2d Cir. 2012).

Finally, FERC’s biases toward project approval must be corrected, or at least blunted, and quickly.  As one careful study of natural gas markets argued recently, industry participants face powerful incentives to overbuild the infrastructure powering the natural gas boom—incentives FERC has made clear it has no intention of counteracting.

Bias and Belief: Investing in NEPA Analyses as Tools for Hard Problems

NEPA § 102(2)(C) expects in the most basic terms: a hard look at the environmental consequences and those of the alternatives to an agency’s intended course of conduct.  See Balt. Gas & Elec. Co. v. NRDC, Inc., 462 U.S. 87, 97-98 (1983).  That has just as long included considering the cumulative impacts of the agency’s conduct—which, in FERC’s case, is a very large ambit indeed.  Until FERC finally commits to studying the cumulative impacts of our fossil fuel-subsidized electricity grid, its NEPA compliance will lag far behind where it should be.

It turns out that agencies that invest in NEPA do end up amending their proposals, sometimes significantly.  As this study by researchers at the University of Utah’s Stegner Center for Land, Resources & the Environment showed, energy project approvals are often changed substantially when real EISs are prepared.

The DRN letter to Congress’s message about bias at FERC should be taken seriously.  Members of Congress have an opportunity after the election that might never come around again.

UPDATE {10/28/16}: See this report by E&E on EPA’s efforts to engage FERC at the highest levels regarding its NEPA practices.

{Image: NEL pipeline construction, c.2012 © Wikipedia}

I teach environmental, natural resources, and administrative law at Penn State Law. Before teaching I was an enforcement lawyer at U.S. EPA. Along the way I've done work for environmental nonprofits and written a fair bit about NEPA.
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