Special Report: Impact of Sabal Trail D.C. Circuit Ruling on Pipeline Backlog
As reported in our breaking analysis of the FERC Order granting a certificate of public convenience and necessity to NEXUS, it appears that FERC is assessing projects caught in the backlog caused by the lack of a quorum to determine whether the analysis conducted in the environmental assessment or environmental impact statement (EIS) comply with the decision issued by the D.C. Circuit in the Sabal Trail appeal. As noted in our initial analysis of the D.C. Circuit ruling, the decision may change FERC's internal review process and, in turn, the order in which it issues certificates in the near term.
In the case of Sabal Trail, the D.C. Circuit found that because the single-purpose of the Sabal Trail pipeline was to provide gas to gas-fired electric generating stations, FERC should have, under NEPA, undertaken an assessment of the impacts of downstream greenhouse gas (GHG) because such impacts were reasonably foreseeable, given the purpose of the project. In the NEXUS certificate order, FERC found that NEXUS did not have a single-purpose similar to that of the Sabal Trail project. Furthermore, the FERC staff had also undertaken an analysis of the downstream GHG effects that was consistent with the Sabal Trail decision.
Methodology
To assess when other projects currently caught in the backlog may be able to move forward, we compared each project's "purpose" statement for Sabal Trail and the project's environmental report discussion of downstream GHG effects to the purpose statement for NEXUS.
We sorted the project purposes into three categories: "Single" if the project's sole purpose is providing gas to electric generating stations as in Sabal Trail; "Mixed" if the project identifies a specific end use similar to that in Sabal Trail, but which also has a portion of the project whose end use is more generic; and "General" if the project's purpose does not specifically identify the intended end use of the transported gas.
We also sorted the robustness of the downstream GHG analysis conducted by FERC into three categories, assessing the robustness as "None" if the environmental report did not quantify the downstream GHG effects from the project at all, which is what the Sabal Trail court found objectionable. We assessed the robustness as "Limited" if the environmental report quantified the downstream GHG effects, but not as fully as in the NEXUS report, and as "Full" if the environmental report assessed the downstream GHG effects in a manner that was nearly identical to the one found in the NEXUS environmental report.
Analysis
Based on this analysis, we would consider the Eastern System Upgrade project to be the only project that is squarely within the precedent set by FERC in NEXUS. For the other pending projects, there are several paths FERC could take.
Mixed and General Purpose Projects
If FERC is willing to determine that the Sabal Trail case applies only to "single-purpose" projects, it could issue a certificate without additional environmental analysis for the projects that we identified as having "Mixed" and "General" purposes.
General Purpose Projects
It is certainly possible, though, that FERC may promptly issue certificates for projects with a "General" purpose, even if the GHG analysis was "Limited."
Mixed Purpose Projects
For "Mixed" purpose projects that had a "Full" GHG analysis, FERC may also promptly issue those certificates, unless it finds that the Sabal Trail project requires a more detailed analysis than the NEXUS analysis in "Mixed" purpose projects. If FERC decides that the NEXUS standard is required for "Mixed" purpose projects, FERC may issue data requests to those applicants to assist the staff in the more detailed analysis that FERC finds is required.
Single-purpose and No GHG analysis
Finally, for projects that are either "Single" purpose that received "Limited" GHG analysis, or "None" at all, it is likely FERC will require the staff to conduct some type of additional analysis, which may require the issuance of data requests to the project applicant.
For clues as to how the Sabal Trail decision may be impacting the processing of backlogged cases, we will be watching the data requests issued by FERC in these cases (the text of which can be found on each project's Profile page), as well as the issuance of FERC certificates, to determine which purpose cases FERC feels it can still approve under the Sabal Trail decision.
We are thinking about our friends in Houston.