Commonwealth LNG, LLC applied to the Federal Energy Regulatory Commission to build and operate a liquefied natural gas export facility in southwestern Louisiana. After a public comment period, FERC issued a final Environmental Impact Statement and authorized the project, finding it consistent with the public interest. Environmental groups, including Healthy Gulf, petitioned for review, arguing that FERC failed to properly assess the project's greenhouse gas emissions, its cumulative air pollution impacts, and reasonable alternatives. The D.C. Circuit consolidated this case with a related petition and heard arguments regarding whether FERC's environmental review met the requirements of the National Environmental Policy Act and the Natural Gas Act.
The court applied the arbitrary and capricious standard of the Administrative Procedure Act to review FERC's decisions. First, regarding greenhouse gas emissions, the court agreed with petitioners that FERC inadequately explained its failure to determine the significance of the project's emissions. While FERC claimed it lacked a methodology to attribute discrete physical effects, the court noted that FERC had previously used a comparative approach in Northern Natural Gas Co. to find emissions insignificant. Because FERC did not explain why that logic did not apply here, where the project's emissions represented a significantly larger percentage of national emissions, the court found a violation of reasoned decision-making requirements. Second, the court addressed cumulative nitrogen dioxide effects. NEPA requires agencies to assess the effects of a project when added to other past, present, and reasonably foreseeable actions. The court found FERC's analysis arbitrary because it concluded cumulative effects were insignificant simply because the project's incremental emissions were below a specific threshold. This reasoning was a non sequitur that ignored the purpose of cumulative analysis, which is to capture collectively significant impacts from individually minor actions. Third, the court rejected the argument that FERC failed to consider alternatives. The court found that FERC's evaluation of a combined-cycle power plant, a reduced tank configuration, and carbon capture was sufficient under NEPA, as the agency provided reasoned choices based on operational feasibility and land use impacts. Finally, the court addressed the remedy. It determined that vacating the authorization order would needlessly disrupt commercial operations and that the defects could be redressed on remand, so the court remanded the case without vacatur.
The FERC authorization for the Commonwealth LNG project remains in effect, but the Commission must return to the record to provide a reasoned explanation for its greenhouse gas significance analysis and to conduct a proper cumulative effects assessment for nitrogen dioxide. On remand, FERC must also reevaluate its public interest determination under Section 3 of the Natural Gas Act, as that determination relied on the now-deficient environmental analysis. The project may proceed while these corrections are made, avoiding the delays associated with a full vacatur.