Thirty Legal Scholars Agree: Opponents of FERC’s Climate Consideration Ignore a Mountain of Decisive Precedent
The Federal Energy Regulatory Commission, which oversees the nation’s interstate pipelines, has a critical role to play in shaping our transition to a low-carbon future. So when the Commission outlined a policy in February to consider climate impacts in pipeline certificate proceedings, observers viewed this as a commonsense and overdue development.
Predictably, backlash from the oil and gas industry was swift and fierce. Opponents argued that the Commission lacks authority to consider climate effects in its oversight of natural gas infrastructure under the Natural Gas Act. Their talking points were echoed by numerous senators at a hearing in early March, who protested that the Commission was improperly assuming a new role as a climate regulator.
But these criticisms of the Commission’s draft policy read the Natural Gas Act far too narrowly, ignoring both statutory design and the Commission’s longstanding consideration of environmental impacts in pipeline certification. As thirty legal scholars, including this author, detail in a comment letter filed with FERC earlier today, the Commission has broad authority to consider climate effects in pipeline certificate proceedings.
Opponents base their objections on a misunderstanding of key legal precedents. They claim that the Natural Gas Act was designed to promote natural gas transmission and presumes such transmission to be in the public interest. But opponents barely substantiate this claim, and the Natural Gas Act in fact contains no such presumption.
To the contrary, by requiring operators to obtain a certificate of public convenience and necessity before building any interstate pipeline infrastructure, Congress drew on eponymous state standards whereby regulators balanced economic and environmental factors. Legislative reports accompanying the Natural Gas Act demonstrate that Congress intended the Federal Power Commission (which became FERC in 1977) to balance a broad array of factors in pipeline certificate proceedings, including the effects of downstream natural gas consumption.
And so the Federal Power Commission did. In numerous proceedings spanning decades, the agency recognized that impacts on air pollution — including downstream air pollution — “merit the most serious attention” in certificate proceedings. The agency in fact rejected some proposed pipelines due to their downstream air pollution impacts. And in 1961, the Supreme Court held that downstream pollution and other broad considerations of natural gas transmission merit consideration in pipeline certification proceedings.
Consideration of environmental impacts has continued in recent years. In its 1999 policy statement for natural gas infrastructure — which still governs but would be supplanted by the newly-proposed policy — the Commission recognized that:
“there may be cases in which . . . adverse impacts on . . . the environment are significant enough that the balance would tip against certification.”
The Commission further recognized that its assessment of environmental impacts includes downstream effects, noting that:
“[it] will continue to take into account as a factor for its consideration the overall [effects] to the environment of natural gas consumption.”
As these precedents and many others establish, the Commission’s consideration of climate impacts in pipeline certificate proceedings is consistent with legislative design, regulatory precedent, and Supreme Court case law. Moreover, the U.S. Court of Appeals for the D.C. Circuit has firmly held that the Commission must consider climate impacts when it reviews proposed pipelines. Yet opponents continue to assert that climate considerations lie beyond the Commission’s purview, claiming that the Supreme Court’s recent decisions under the nascent major questions doctrine buoys their argument. Once again, they are wrong.
The Supreme Court has applied the major questions doctrine in a small number of cases where an agency claimed an “unheralded power to regulate a significant portion of the American economy” in “a long-extant statute.” Here, however, the Commission does not expand the scope of its regulation at all, and merely outlines the factors that it will consider when exercising its existing authority over natural gas pipelines. Such a limited development does not remotely resemble the types of regulatory expansions that have characterized previous applications of the major questions doctrine.
Moreover, when the Supreme Court has applied the major questions doctrine, it has looked to such factors as legislative design, Congressional intent, and regulatory precedent. And as discussed above, those factors all support the Commission’s proposed approach to considering climate impacts in pipeline certification proceedings.
While the oil and gas industry fumes that it will be subject to closer regulatory scrutiny from the Commission, it doesn’t have a legal leg to stand on. The Commission should continue to prioritize climate impacts when it finalizes its draft policy statements.
