'Statutory rubber stamp': FERC gas approvals face court battle - E&E News by POLITICO

By Niina H. Farah | 11/29/2023 06:30 AM EST

An aerial view of Texas' Port of Brownsville, which is the site of the proposed Rio Grande liquefied natural gas terminal. Coast Guard News/Flickr Garage Door Threshold Seal

'Statutory rubber stamp': FERC gas approvals face court battle - E&E News by POLITICO

Court fights over proposed Gulf Coast gas export facilities are exerting new pressure on federal energy regulators to reevaluate whether it is in the public’s best interest to ship fossil fuels to foreign countries as the world confronts climate change.

The permitting process for liquefied natural gas facilities is different from other types of gas projects because the federal government has to sign off not only on construction of the facility itself, but also on the fuel’s destination. The Department of Energy is responsible for greenlighting LNG exports, and the Federal Energy Regulatory Commission approves siting and construction.

Advocacy groups are making their argument in at least three pending court cases that the authorization process is in serious need of a revamp.

“There’s a little bit of a buck-passing between the agencies,” said Sierra Club attorney Nathan Matthews, who has challenged numerous LNG export terminals in court.

“We want to litigate the fundamental question,” he said. “Is this in the nation’s interest?”

A lack of analysis is enshrined in at least part of the LNG approval process. DOE is required by Congress under the Natural Gas Act to greenlight gas exports to free-trade-agreement countries.

“It’s virtually a statutory rubber stamp,” said Megan Gibson, chief counsel at the Niskanen Center, which has litigated on behalf of property owners in the path of LNG projects.

LNG is gas that has been cooled to liquid form at minus 260 degrees Fahrenheit, drastically shrinking its volume and allowing it to be more easily stored and transported in specialized containers.

The United States is already the world’s largest LNG exporter, and gas shipments are expected to continue to increase, according to the U.S. Energy Information Administration. EIA anticipates total export capacity across North America will more than double by 2027, with U.S. terminals accounting for three-quarters of the new capacity.

While LNG’s supporters laud the fuel as important for U.S. economic and national security, the industry’s critics say expansion in the face of rising global greenhouse gas emissions is a mistake.

If LNG is bound for non-free-trade-agreement countries, DOE has discretion to decide whether exports are in the public interest, but the threshold for agency approvals is “rather low and not very well-defined,” Gibson said.

Meanwhile, Section 3 of the NGA tells FERC it can approve or deny an application for siting an LNG facility, but the statute doesn’t provide a legal standard for how to make that decision, said Jennifer Danis, federal energy policy director at the Institute for Policy Integrity.

As a result, FERC has tended to follow DOE’s determination that projects should move forward, and courts have gone along with that approach.

However, Danis said FERC should place less emphasis on DOE’s decisionmaking and give greater weight to factors like environmental justice and climate impacts.

“Because the structure of Section 3 breaks the export approval determination apart from the facilities siting question, it would make sense that FERC’s and DOE’s determinations require very different inquiries,” Danis said in an email.

Neither agency responded to requests for comment about their approach to approving LNG facilities.

In addition to climate risk, LNG development often leads to wetland loss and diminished coastal resilience to hurricanes, said Matthews of the Sierra Club. And LNG facilities are most likely to be located near low-income communities of color that already face disproportionate exposure to pollution.

“Looking at the whole life cycle, it is contrary to the public interest,” said Matthews. “It’s locking us into fossil fuels for another 20 or 30 years when we need to be ramping down our use.”

Critics of the current system for LNG export approvals say they do not see the federal government’s approach changing without intervention from the courts.

In July, DOE rejected a petition first filed in 2013 by the Sierra Club and the Center for Biological Diversity, requesting that the agency create regulations for deciding whether exports are in the public interest. DOE’s response only came after the groups sued to force the agency to address their request.

On Nov. 14, Democratic Sen. Jeff Merkley of Oregon and 65 other lawmakers signed a letter to DOE, calling on the agency to revamp what they said was its “outdated and insufficient methods of measuring climate impacts.”

Keith Hall, director of the Energy Law Center at Louisiana State University, said the current review process — with DOE leading decisionmaking on whether exports should go forward — makes sense.

LNG project opponents object to FERC’s value judgment that exports are in the public interest, but they don’t have a legal pathway to fight the decisions on that basis, so they instead challenge the agency’s analysis, he said.

“There’s no reason why the two different federal government agencies should be making the same decision,” Hall said.

He also noted that while environmental groups have advocated for use of the social cost of greenhouse gases to analyze how LNG projects increase harm from rising global emissions, Hall said there is “some merit” to arguments that the calculation is speculative.

For example, he said, it isn’t clear whether approval of a new LNG project could prompt importing nations to move away from coal or renewable projects like solar.

Here are three pending lawsuits that could soon address environmentalists’ concerns about LNG export approvals.

In a legal challenge against the Commonwealth LNG project in southwest Louisiana, Healthy Gulf and other green groups are pushing FERC to do a better job analyzing proposals with “significant” greenhouse gas emissions.

“The courts have been clear that FERC has the authority and obligation to consider [climate] impacts,” said Matthews of the Sierra Club, which is also part of the lawsuit. “We think FERC is wrong in arguing that it is impossible to make a [National Environmental Policy Act] determination as to whether these impacts are significant.”

In their lawsuit, environmental groups claim FERC “repeatedly’ violated NEPA and the NGA by “denying itself information that might have caused it to deny a permit or require mitigation.” The groups are concerned that FERC refused to quantify the impact of the facility’s 3.5 million metric tons of emissions each year.

“FERC both compromised consideration of potential mitigation and deprived the public of the informed, transparent decision-making NEPA requires,” the groups told the U.S. Court of Appeals for the District of Columbia Circuit.

If it is built, the Commonwealth project will be one of three LNG facilities in Cameron, Louisiana, and one of nine in the region. Local residents have questioned how adding another gas facility will affect air pollution, as well as local fishing and shrimping.

Briefing in the case is now complete. The D.C. Circuit has not yet scheduled oral arguments.

A new round of litigation is underway for a pair of LNG terminals in Brownsville, Texas, that will try for a second time to get FERC to reconsider the alleged disproportionate harm the facilities pose to local communities.

The D.C. Circuit sent FERC back to the drawing board in 2021 to redo its analysis of the effects of Rio Grande LNG and Texas LNG on greenhouse gas emissions, nearby low-income Latino communities and an Indigenous sacred site.

The agency completed its review this year, taking steps such as estimating the societal costs of greenhouse gas emissions from the terminals. FERC also ordered Glenfarne Energy Transition, the parent company of Texas LNG and NextDecade, the company behind Rio Grande LNG, to file plans for limiting local air pollution from the facilities to levels considered acceptable by EPA.

But the Sierra Club and other challengers said FERC’s efforts were insufficient and called on the agency to complete a new NEPA review. They also warned that while FERC had identified more than 300 communities that could face an outsize impact from the facility, the agency had not done enough to communicate information about the projects by making materials available in Spanish.

Residents affected by the projects include members of the nonfederally recognized Carrizo/Comecrudo Tribe of Texas. The terminals are slated for Garcia Pasture, a sacred village and burial site.

FERC declined to do the more rigorous NEPA analysis, and the Sierra Club filed two separate lawsuits in July. The cases are now being briefed before the D.C. Circuit.

The Sierra Club is planning to sue to block the CP2 LNG project in Texas once the facility receives its full federal approvals — possibly sometime in the first half of next year.

The $10 billion terminal developed by Venture Global LNG is one of the largest facilities of its kind approved by the Biden administration. The project is planned near a low-income community in a part of the state that is already home to several other industrial gas projects, raising concerns about the outsize pollution effects on the region.

Gibson of the Niskanen Center said she is watching the CP2 project for signs that FERC is “muddying the waters” between what she said was the ill-defined standard DOE utilizes to approve the export, and FERC relying on that DOE approval to authorize the entire project, including both the pipeline and LNG facility.

“Nobody at the federal level is doing their due diligence,” said Gibson, “including FERC.”

'Statutory rubber stamp': FERC gas approvals face court battle - E&E News by POLITICO

Auto Connector Correction: An earlier version of this article incorrectly stated that the Federal Energy Regulatory Commission determines whether a project is inconsistent with the public interest under Section 3 the Natural Gas Act.