The Federal Energy Regulatory Commission, or FERC, granted a certificate of public convenience and necessity to Tennessee Gas Pipeline Company and Southern Natural Gas Company to construct and expand interstate natural gas pipelines in the Southeastern United States. This project, known as the Evangeline Pass Expansion Project, involved new pipelines, compression facilities, and meter stations designed to move more natural gas. Environmental groups, including the Sierra Club and Healthy Gulf, challenged the certification, arguing that FERC violated the National Environmental Policy Act by failing to consider the environmental impacts of four other connected gas projects and the indirect effects of gas exports. Separately, the Alabama Municipal Distributors Group, a customer of Southern Natural Gas, argued that the expansion would generate excessive profits for the pipeline owner and that FERC should grant them a credit on their rates to share in those profits. FERC denied all objections, and the petitioners sought review in the D.C. Circuit.
The court addressed three primary challenges under the Administrative Procedure Act. First, regarding the 'connected actions' argument, the court applied the regulatory definition which requires projects to be interdependent or unable to proceed without one another. The court found substantial evidence that the four projects cited by the Sierra Club were physically and functionally independent, as they could receive gas from various sources and did not share ownership with the Evangeline Pass Project. Furthermore, their timelines did not significantly overlap in a way that undermined their functional independence. Second, the court ruled that FERC correctly declined to analyze the environmental effects of exported gas. Under the Natural Gas Act, FERC lacks authority over foreign commerce; that power belongs exclusively to the Department of Energy. Citing precedent, the court held that an agency has no obligation to consider environmental effects of actions it lacks the legal power to prevent or regulate. Third, the court rejected the claim that FERC must use the 'social cost of carbon' metric. The agency had not finalized a workable method for applying this tool and instead provided a comparative analysis of emissions. The court found this approach reasonable and consistent with prior rulings where FERC similarly declined to use the metric due to its lack of finality.
The certification for the Evangeline Pass Expansion Project stands, allowing the pipeline companies to proceed with construction and operation. The decision clarifies that FERC is not required to analyze the environmental impacts of gas exports or treat separate pipeline projects as connected unless they are functionally interdependent. It also confirms that existing customers who do not utilize new capacity are not entitled to credits for profits generated by that new capacity. No remand instructions were issued as the petitions were denied.