Delaware Riverkeeper Network v. FERC ( 2022 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 24, 2021 Decided August 2, 2022
No. 20-1206
DELAWARE RIVERKEEPER NETWORK AND MAYA VAN
ROSSUM, THE DELAWARE RIVERKEEPER,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
ADELPHIA GATEWAY, LLC,
INTERVENOR
Consolidated with 20-1338
On Petitions for Review of Orders
of the Federal Energy Regulatory Commission
Kacy C. Manahan argued the causes for petitioners
Delaware Riverkeeper Network, et al. Douglas R. Blazey
argued the causes for petitioner West Rockhill Township. With
them on the joint briefs was John R. Embick.
Jared B. Fish, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on
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the brief were Matthew R. Christiansen, General Counsel, and
Robert H. Solomon, Solicitor.
Jeremy C. Marwell argued the cause for intervenor. With
him on the brief were James D. Seegers, Suzanne E. Clevenger,
Matthew X. Etchemendy, and James T. Dawson.
Before: ROGERS and JACKSON*, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
Opinion for the Court by Circuit Judge ROGERS.
ROGERS, Circuit Judge: Adelphia Gateway, LLC, applied
to the Federal Energy Regulatory Commission for a certificate
of public convenience and necessity to acquire an existing
pipeline system in Pennsylvania and Delaware. It also sought
authorization to construct two short lateral pipeline segments
extending from the existing pipeline infrastructure it would
acquire. One of these, the “Parkway Lateral,” would consist of
a 0.3-mile lateral to an existing meter station that provides
natural gas service to several transmission companies and
power plants. Adelphia also sought approval to construct
facilities necessary to operate the pipeline, including the
Quakertown Compressor Station in Bucks County,
Pennsylvania. Together, these acquisitions and improvements
would comprise the Adelphia Gateway Project (“the Project”).
The Commission conducted an Environmental
Assessment analyzing the Project’s safety and its effects on air
quality, noise, and residential lands near the pipeline. The
Commission acknowledged that the Project “would contribute
*
Circuit Judge Jackson, now Justice Jackson, was a member of the
panel at the time the case was argued but did not participate in the
preparation of this opinion.
3
to global increases in [greenhouse-gas] levels,” but did not
calculate “the downstream [greenhouse-gas] emissions of the
southern portion of the Project,” because “the downstream
emissions from the remainder of the southern portion of the
Project are not designated to a specific user, and the end use of
the natural gas is not identified by Adelphia.” Environmental
Assessment at 132. The Commission also declined to consider
the upstream impacts of the Project on demand for natural gas,
which it found to be “outside the scope of this [Environmental
Assessment].” Id. The Commission considered and rejected
several alternatives to the Project, and specifically to the
location of the Quakertown Compressor Station. Id. at 183–84.
The Environmental Assessment concluded that “if Adelphia
constructs and operates the proposed facilities in accordance
with its application and supplements and [the Commission’s]
recommended mitigation measures,” the project would have
“no significant impact” on the environment. Id. at 194.
Petitioners filed comments with the Commission challenging
the adequacy of the Environmental Assessment and Adelphia’s
application for a certificate.
The Commission issued a certificate of public convenience
and necessity for the Project, finding that Adelphia had
demonstrated market need for the Project. It relied largely on
four precedent agreements Adelphia had entered for the
majority of the Project’s capacity. It rejected commenters’
arguments that there was insufficient demand in the region to
support the Project, concluding that commenters had provided
“no compelling evidence of overbuilding in the face of
compelling evidence of need in the form of substantial
customer support.” Certificate Order at 15. The Commission
concluded that “the benefits that the Adelphia Gateway Project
will provide to the market outweigh any adverse effects on
existing shippers, other pipelines and their captive customers,
and on landowners and surrounding communities.” Id. at 17.
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One member of the Commission dissented. Requests for
rehearing and a stay of the Certificate Order were denied, and
the Commission reaffirmed its finding of market need, its
balancing of adverse impacts and public benefits, and its
environmental analysis.
I.
In their joint brief, petitioners challenge: (1) the
Commission’s finding of market need for the Project under the
Natural Gas Act; (2) the sufficiency of the Commission’s
environmental review under the National Environmental
Policy Act (“NEPA”); and (3) the constitutionality of the
Commission’s purported preemption of state and local
authorities’ ability to protect public health. The Court is
persuaded that the Commission did not act arbitrarily and
capriciously.
This court reviews the Commission’s orders, “including
those approving certificate applications, under the familiar
arbitrary and capricious standard” of the Administrative
Procedure Act (“APA”). Minisink Residents for Env’t Pres. &
Safety v. FERC, 762 F.3d 97, 105–06 (D.C. Cir. 2014); see also
5 U.S.C. § 706(2)(A). An agency’s compliance with NEPA’s
requirements is also reviewed under the APA’s arbitrary and
capricious standard. Sierra Club v. FERC, 867 F.3d 1357,
1367 (D.C. Cir. 2017) (“Sabal Trail”). Thus, with respect to
petitioners’ challenges under both the Natural Gas Act and
NEPA, the question is whether the Commission’s Certificate
and Rehearing Orders were “based on a consideration of the
relevant factors and whether there has been a clear error of
judgment.” Minisink, 762 F.3d at 106 (quoting ExxonMobil
Gas Mktg. Co. v. FERC, 297 F.3d 1071, 1083 (D.C. Cir.
2002)). The agency’s decision must “contain ‘sufficient
discussion of the relevant issues and opposing viewpoints,’”
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Sabal Trail, 867 F.3d at 1368 (quoting Nevada v. Dep’t of
Energy, 457 F.3d 78, 93 (D.C. Cir. 2006)), and “demonstrate
‘reasoned decisionmaking,’” id. (quoting Del. Riverkeeper
Network v. FERC, 753 F.3d 1304, 1313 (D.C. Cir. 2014)).
To the extent petitioners challenge the Commission’s
factual findings, this court reviews those findings to ensure
they are supported by substantial evidence in the record.
Myersville Citizens for a Rural Cmty. v. FERC, 783 F.3d 1301,
1309 (D.C. Cir. 2015). Substantial evidence means “such
relevant evidence as a reasonable mind might accept as
adequate to support a conclusion,” id. (quoting Colo. Interstate
Gas Co. v. FERC, 599 F.3d 698, 704 (D.C. Cir. 2010)), and this
standard “requires more than a scintilla, but can be satisfied by
something less than a preponderance of the evidence,” id.(quoting Minisink, 762 F.3d at 108).
A.
NEPA provides that “[a]ny proposed ‘major Federal
action[] significantly affecting the quality of the human
environment’ triggers in an agency the obligation to prepare an
Environmental Impact Statement . . . discussing in detail the
environmental impact of the proposed action, alternatives to
the action, and other considerations.” Myersville, 783 F.3d at
1322 (second alteration in original) (quoting 42 U.S.C. §
4332(C)). “An agency may preliminarily prepare an
Environmental Assessment . . . to determine whether the more
rigorous [Environmental Impact Statement] is required.” Id.An environmental impact statement “is unnecessary if an
agency makes a ‘finding of no significant impact’” on the
human environment, which “discharges the agency’s NEPA
documentation obligations.” Id.Petitioners contend that both the Commission’s
environmental impact analysis and its analysis of alternatives
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to the Project were deficient, resulting in an erroneous finding
of no significant impact. Petitioners maintain that the
Commission failed to consider (1) upstream effects of
increased demand for natural gas; (2) downstream effects of
increased natural gas consumption, specifically the resulting
greenhouse gas emissions from such consumption; (3) the
effects on climate change resulting from downstream
greenhouse-gas emissions; (4) the cumulative impact of the
Project together with another pipeline project; and (5) the
environmental effects of the Quakertown Compressor Station
as compared to alternatives. By circumscribing its analysis in
these ways, petitioners maintain, the Commission erroneously
reached a finding of no significant impact rather than
proceeding to conduct a full environmental impact statement.
i. Upstream impacts
Petitioners contend that the Commission failed to consider
the possible upstream effects of the Project, particularly
drilling new natural gas wells to meet the pipeline’s increased
capacity. The Commission was required to consider these
upstream impacts only if they were reasonably foreseeable. 40
C.F.R. § 1508.1(g). Petitioners point to no evidence
undermining the Commission’s reasoned conclusion that such
impacts were not reasonably foreseeable.
The Commission initially deemed upstream effects on
drilling to be “outside the scope” of the environmental
assessment stage of project review. Environmental
Assessment at 132. In its Certificate Order, the Commission
clarified that “the environmental impacts of upstream natural
gas production are not an indirect effect of the project” because
“the Adelphia Gateway Project will receive gas from other
interstate pipelines and there is no evidence that” general
information about drilling in the region “would help predict the
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number and location of any additional wells that would be
drilled as a result of any production demand associated with the
project.” Certificate Order at 99.
As in Birckhead v. FERC, 925 F.3d 510 (D.C. Cir. 2019),
petitioners here “have identified no record evidence that would
help the Commission predict the number and location of any
additional wells that would be drilled as a result of production
demand created by the Project.” Id. at 517. Nor do petitioners
point to any evidence that shippers “would not extract and
produce [the] gas” even if the Project did not go forward. Id.
For example, in support of their assertion that upstream
increases in natural gas drilling were reasonably foreseeable,
petitioners cite a table showing “[a]ctive, proposed, and
reported natural gas wells in Pennsylvania.” Appendix 1,
PennEast Well Drilling Impacts. But petitioners do not explain
how that location data supports an inference that more wells
will be needed to support increased demand spurred by the
Project. And as in Birckhead, petitioners “nowhere claim that
the Commission’s failure to seek out additional information
[regarding upstream effects] constitutes a violation of its
obligations under NEPA.” 925 F.3d at 518. Birckhead governs
the analysis and forecloses petitioners’ contention that the
Commission did not adequately consider upstream effects of
the Project.
ii. Downstream impacts
Greenhouse gas emissions are reasonably foreseeable
effects of a pipeline project when the project is known to
transport natural gas to particular power plants. Sabal Trail,
867 F.3d at 1371–74; accord Birckhead, 925 F.3d at 518.
Nonetheless, there will inevitably be some limits on the
foreseeability of emissions, and the court has rejected the
notion that downstream emissions are always reasonably
8
foreseeable effects of a pipeline project. Birckhead, 925 F.3d
at 518–19. The court “defer[s] to the informed discretion” of
the Commission, especially “[w]here an issue requires a high
level of technical expertise.” Del. Riverkeeper, 753 F.3d at
1313.
The Commission analyzed the downstream emissions
impacts of much of the natural gas subscribed in Adelphia’s
four existing precedent agreements. It determined that any
other downstream greenhouse gas emissions resulting from the
Project — including emissions associated with a precedent
agreement to deliver gas on the Zone South system for further
transportation on the interstate grid — were not reasonably
foreseeable because the Commission was unable to identify the
end users of that natural gas. The Commission’s reasoning was
sound. It explained that natural gas would be delivered for
further transportation on the interstate grid to an unknown
destination and for an unknown end use. It therefore declined
to estimate emissions associated with those volumes of gas.
Petitioners maintain that because the vast majority of natural
gas is ultimately combusted for use as a fuel source, the
Commission should have used the entire volume of gas to be
transported on the Project as a basis for estimating emissions
— a so-called full-burn analysis. That objection is foreclosed
by Birckhead, which rejected the contention that “emissions
from downstream gas combustion are, as a categorical matter,
always a reasonably foreseeable indirect effect of a pipeline
project.” 925 F.3d at 519. Petitioners also suggest that, even
if a full-burn analysis was not required, the Commission should
have assumed that “a certain percentage” of natural gas
transported on the Project “will be combusted based on
industry statistics.” Reply Br. 10. That still assumes, contrary
to Birckhead, that emissions from downstream combustion are
categorically reasonably foreseeable and that industry averages
can be applied in any and every case. Further, petitioners make
9
no attempt to “identify [a] method . . . that the Commission
could have used,” EarthReports, Inc. v. FERC, 828 F.3d 949,
956 (D.C. Cir. 2016), to calculate that “certain percentage”
based on “industry statistics,” Reply Br. 10.
Petitioners argue that if the information available to the
Commission was too generalized to permit an estimate of
emissions, the Commission should have gathered that
information from Project stakeholders. See Birckhead, 925
F.3d at 519–20. The Commission did ask Adelphia about the
destination and end use of the Zone South capacity subscribed
in the fourth precedent agreement. Adelphia informed the
Commission that the gas would be delivered for further
transportation on the interstate grid for an unknown end use.
Certificate Order at 102 & n.550. Petitioners maintain that this
exchange did not discharge the Commission’s obligation to “at
least attempt to obtain the information necessary to fulfill [the
Commission’s] statutory responsibilities.” Birckhead, 925
F.3d at 520. Petitioners maintain the Commission should have
taken the extra step of asking the shipper about the destination
and end use of the gas. See Pet’rs’ Br. 30–31. But petitioners
did not raise this argument on rehearing before the
Commission, instead arguing that the Commission had
sufficiently specific information to analyze the full extent of
downstream impacts. Petitioners’ one offhand, unsupported
comment that the Commission “should have asked for more
specifics . . . if the information was too general” did not put the
Commission on notice of the position petitioners now take
before this court. Pet. for Reh’g at 108. Because this claim
was not adequately raised before the Commission, the court
lacks jurisdiction to consider it. See Food & Water Watch v.
FERC, 28 F.4th 277, 286 (D.C. Cir. 2022); Birckhead, 925 F.3d
at 520.
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Petitioners also maintain that, at a minimum, the
Commission should have calculated the emissions associated
with the Parkway Lateral, a new 0.3-mile segment of pipeline
that would connect the existing pipeline with other existing
natural gas facilities and infrastructure. Consistent with
Birckhead, 925 F.3d at 520, the Commission sought further
information from Adelphia about the Parkway Lateral, see
DPC Data Request from Commission to Adelphia (July 12,
2018); Adelphia’s Response to DPC Data Request (July 27,
2018), and learned that the Parkway Lateral “may serve
Calpine Corporation’s power plants,” but that “no contract or
precedent agreement exists to ascribe any particular capacity to
this potential end user,” Environmental Assessment at 132
n.39. Contrary to petitioners’ suggestion, this case is unlike
either Sabal Trail, 867 F.3d at 1364, 1371–72, or Food &
Water Watch, 28 F.4th at 288, as in both cases, precedent
agreements provided data as to how much gas would be
transported and thus offered a basis for the Commission to
estimate emissions. Here, in the absence of any data regarding
the “amount of capacity that would serve a power plant,” the
Commission concluded it could not “reasonably quantify or
foresee the [greenhouse-gas] emission impacts” associated
with the Parkway Lateral. Reh’g Order at 58. Given the
deference owed to the Commission’s technical judgments, the
court cannot conclude this was unreasonable. Del.
Riverkeeper, 753 F.3d at 1313.
iii. Climate change impacts
Under 15 U.S.C. § 717r, courts may not consider an
“objection to the order of the Commission . . . unless such
objection shall have been urged before the Commission in the
application for rehearing.” Id. § 717r(b). A challenger’s
rehearing application must “set forth specifically the ground or
grounds upon which such application is based.” Id. § 717r(a).
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To satisfy this standard, a party must raise an issue in a petition
for rehearing with “sufficient clarity regarding the grounds on
which it urged reconsideration,” Belco Petrol. Corp. v. FERC,
589 F.2d 680, 683 (D.C. Cir. 1978), to “alert the Commission
to particular and possibly remediable problems,” R.I.
Consumers’ Council v. Fed. Power Comm’n, 504 F.2d 203,
213 (D.C. Cir. 1974).
The Commission concluded that there was “no
scientifically-accepted methodology available to correlate
specific amounts of [greenhouse-gas] emissions to discrete
changes in” the human environment, Environmental
Assessment at 172, and rejected the Social Cost of Carbon
methodology for assessing climate change impacts, Reh’g
Order at 41–42. The Social Cost of Carbon is a tool that
quantifies in monetary terms the climate change impact
resulting from greenhouse-gas emissions. This court has
upheld similar explanations as sufficient to justify the
Commission’s refusal to use the Social Cost of Carbon tool.
See EarthReports, 828 F.3d at 956.
Petitioners maintain that a Social Cost of Carbon analysis
was required pursuant to 40 C.F.R. § 1502.21(c)(4), which
provides that when “information relevant to reasonably
foreseeable significant adverse impacts cannot be obtained
because . . . the means to obtain it are not known,” “the agency
shall include within the environmental impact statement . . .
[t]he agency’s evaluation of such impacts based upon
theoretical approaches or research methods generally accepted
in the scientific community.” Id. Petitioners contend that the
Social Cost of Carbon tool is one such generally accepted
methodology. See Pet’rs’ 28(j) Letter at 1–2 (Aug. 19, 2021)
(citing Vecinos para el Bienestar de la Comunidad Costera v.
FERC, 6 F.4th 1321 (D.C. Cir. 2021)).
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But they did not argue before the Commission that section
1502.21(c) required the use of the Social Cost of Carbon tool.
Their rehearing request referred to the regulation once in a
footnote, and only in the context of the version of the argument
petitioners then relied on — that the Commission was wrong
to reject the Social Cost of Carbon tool on grounds of scientific
merit. Reh’g Request at 125. That passing reference was not
enough to “alert the Commission” to the position petitioners
now take. R.I. Consumers’ Council, 504 F.2d at 213. On its
face, 40 C.F.R. § 1502.21(c) applies only to “environmental
impact statements,” as opposed to environmental assessments.
Petitioners never advanced an explanation why the
Commission was required to use this tool in the less demanding
environmental assessment context. Because petitioners failed
to “set forth specifically [this] ground” before the Commission,
15 U.S.C. § 717r, the court lacks jurisdiction to consider this
contention, see Food & Water Watch, 28 F.4th at 287, 290.
iv. PennEast Pipeline
“An agency impermissibly ‘segments’ NEPA review
when it divides connected, cumulative, or similar federal
actions into separate projects and thereby fails to address the
true scope and impact of the activities that should be under
consideration.” Del. Riverkeeper, 753 F.3d at 1313. Whether
actions should be considered as connected turns on “whether
one project will serve a significant purpose even if a second
related project is not built.” City of Bos. Delegation v. FERC,
897 F.3d 241, 252 (D.C. Cir. 2018) (quoting Coal. on Sensible
Transp., Inc. v. Dole, 826 F.2d 60, 69 (D.C. Cir. 1987)).
Petitioners acknowledge that the PennEast Pipeline
Project is now defunct; the Commission vacated the certificates
it had issued authorizing that project; and this court granted the
Commission’s motions to dismiss pending actions related to
13
that project. Petitioners thus recognize that, in the event of a
remand to the Commission, “it is no longer necessary for [the
Commission] to consider PennEast in its NEPA analysis.”
Pet’rs’ 28(j) Letter at 2 (Mar. 17, 2022).
The dissolution of the PennEast Pipeline Project has
rendered harmless any error in the Commission’s failure to
consider the two projects as connected actions. The “rule of
prejudicial error,” 5 U.S.C. § 706, applies “in the NEPA
context where the proposing agency engaged in significant
environmental analysis before reaching a decision but failed to
comply precisely with NEPA procedures.” Nevada, 457 F.3d
at 90. Even assuming the Commission was required to
consider the Project and the PennEast Pipeline as connected
actions, the Commission’s environmental review did not
prejudice petitioners because the abandonment of the PennEast
project eliminated the possibility that the projects could have a
cumulative environmental impact.
v. Quakertown Compressor Station and
Alternatives
Petitioners finally contend that the Commission did not
adequately consider the environmental effects of construction
of the Quakertown Compressor Station as compared to
alternative options. Petitioners offer a laundry list of purported
deficiencies in the Commission’s analysis, but the Commission
took a “hard look” at each point raised by petitioners,
discharging its obligations under NEPA. Minisink, 762 F.3d at
111.
Several of petitioners’ concerns regarding the Quakertown
Compressor Station revolve around the size of the Quakertown
site, particularly as compared to other possible sites for the
compressor station. The Commission addressed these
concerns in a reasoned manner. It explained that, while there
14
may have been larger possible sites, there was no hard-and-fast
rule regarding the minimum acceptable site size for a
compressor station, and that the purported requirements
petitioners pointed to in agency guidance documents merely
noted the typical acreage for a compressor station, not the
minimum required acreage. Certificate Order at 52. The
Commission also reasoned that any size advantage, including
increased isolation distances to nearby structures, of alternative
sites was outweighed by other concerns, including the need for
“additional compression, resulting in increased air emissions.”
Reh’g Order at 21–22. Even if the compressor station were
relocated to one of the alternative sites, the Commission
pointed out, an above-ground facility would still be needed at
the Quakertown site. Id.; Environmental Assessment at 184.
The Commission did not misstate the sizes of the alternative
sites; it observed that the Salford alternative site offered 2.3
“[c]onstruction acres,” not 2.3 total acres. Environmental
Assessment at 184.
Petitioners raise safety concerns regarding the
Quakertown site. But their objections — that the Commission
neglected to “consider land use laws” and improperly permitted
Adelphia to “rely upon local emergency personnel in the event
of an incident,” Pet’rs’ Br. 40 — are undeveloped and
unsupported. The court is unable to discern any basis for
rejecting the Commission’s safety analysis, which considered
applicable federal safety standards, the distance from the
compressor station to existing structures and residences, and
the mitigation measures to which Adelphia had committed.
Likewise, the Commission considered and addressed concerns
about noise pollution and air quality impacts.
Petitioners’ apprehension regarding the construction of an
industrial facility near “historic homes” and “prime farmlands
and wetlands,” Pet’rs’ Br. 41, is understandable. But the
15
court’s role “is simply to ensure that the agency has adequately
considered and disclosed the environmental impact of its
actions and that its decision is not arbitrary or capricious.”
Balt. Gas & Elec. Co. v. Nat. Res. Def. Council, 462 U.S. 87,
97–98 (1983). The Commission gave reasoned responses to
petitioners’ objections that adequately justified its decision not
to prepare an Environmental Impact Statement. See
Myersville, 783 F.3d at 1322.
The court’s “role in reviewing an agency’s decision not to
prepare an [Environmental Impact Statement] is a ‘limited’
one, ‘designed primarily to ensure that no arguably significant
consequences have been ignored.’” Myersville, 783 F.3d at
1322 (quoting TOMAC v. Norton, 433 F.3d 852, 860 (D.C. Cir.
2006)). The Environmental Assessment thoroughly considered
the environmental impacts of the Project and reasonably
concluded that the Project, which consists mainly of the
transfer of ownership of existing pipeline, was not likely to
have a significant impact on the environment. The record
demonstrates that the Commission was justified in its decision
to proceed by Environmental Assessment.
B.
Petitioners also contend that the Commission’s
determination of market need for the Project was flawed. Prior
to filing its application, Adelphia held an open season in
November and December 2017 to solicit potential interest in
the pipeline’s service. As a result, Adelphia entered into four
long-term precedent agreements with natural gas shippers.
“Precedent agreements are long-term contracts in which gas
shippers agree to buy the proposed pipeline’s transportation
services.” Allegheny Def. Project v. FERC, 964 F.3d 1, 19
(D.C. Cir. 2020) (en banc). These agreements accounted for
approximately 76% of the Project’s total natural gas
16
transportation capacity. Some of the precedent agreements
called for the gas subscribed to be delivered to a known end
user; others called for the gas to be transported to
interconnections with other interstate pipelines for further
transportation on the interstate grid.
Precedent agreements are important, and sometimes
sufficient, evidence of market need for a pipeline project. See
Minisink, 762 F.3d at 111 n.10; City of Oberlin v. FERC, 937
F.3d 599, 605–06 (D.C. Cir. 2019). Petitioners nevertheless
maintain that the Commission’s determination of public need
was flawed because the Commission unreasonably relied
exclusively on Adelphia’s precedent agreements and ignored
competing evidence demonstrating there was no market need
for the project. In an August 19, 2021 letter, petitioners
contend that this court’s decision in Environmental Defense
Fund v. FERC, 2 F.4th 953 (D.C. Cir. 2021) (“Spire STL”)
undermines the Commission’s reliance on precedent
agreements here. In a March 17, 2022 letter, petitioners argue
that the Commission’s Updated Policy Statement on
Certification of New Interstate Natural Gas Facilities, 178
FERC ¶ 61,107 (2022) (“Updated Certificate Policy
Statement”) demonstrates the inadequacy of the Commission’s
reliance on precedent agreements as evidence of market need.
Finally, petitioners suggest that the Commission’s market need
determination failed to account for adverse environmental
effects.
First, petitioners’ contention that competing evidence of a
lack of demand rebutted the existing precedent agreements is
misplaced. The court has observed that the Commission is not
ordinarily required “to assess a project’s benefits by looking
beyond the market need reflected by the applicant’s existing
contracts with shippers.” Minisink, 762 F.3d at 111 n.10; see
Myersville, 783 F.3d at 1311; City of Oberlin, 937 F.3d at 605–
17
06. And in any event, the Commission addressed the evidence
petitioners point to as demonstrating sufficient existing
pipeline capacity, reasonably concluding that concrete
obligations to purchase natural gas (as demonstrated by the
precedent agreements) were better evidence of market need
than the more speculative reports regarding overbuilding and
future demand relied on by petitioners.
Spire STL does not cast doubt on that analysis. There, the
court held that the Commission’s finding of market need was
arbitrary and capricious in part because “the application was
supported by only a single precedent agreement” with a shipper
who “was a corporate affiliate of the applicant who was
proposing to build the new pipeline.” 2 F.4th at 973. That one
precedent agreement with an affiliated shipper was
questionable evidence of market need, the court held, because
that agreement was reached after the pipeline builder held an
open season that produced no precedent agreements, id., and
because petitioners had “identified plausible evidence of self-
dealing,” id. at 975. Here, by contrast, Adelphia held an open
season that produced precedent agreements with four different
shippers for the large majority of the pipeline’s capacity. And
crucially, most of the Project consists of existing pipeline that
is merely changing ownership; in that context, the Commission
could reasonably conclude that precedent agreements were
especially good evidence of demand for the pipeline’s capacity.
Nor does the Updated Certificate Policy Statement call
into question the Commission’s reliance on precedent
agreements here. Instead, it simply observes that, whereas the
Commission has sometimes relied “almost exclusively on
precedent agreements to establish project need” in the past,
going forward, the Commission will look to other evidence of
project need as well. 178 FERC ¶ 61,107, P 54 (2022). The
Commission made clear that it would not apply the Updated
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Certificate Policy Statement “to pending applications or
applications filed before the Commission issues any final
guidance in these dockets,” Order on Draft Policy Statements,
178 FERC ¶ 61,197, P 2 (2022). The court has explained that
an agency’s adoption of a new policy does not render decisions
reached under an earlier policy arbitrary and capricious.
Brooklyn Union Gas Co. v. FERC, 409 F.3d 404, 406 (D.C.
Cir. 2005).
Petitioners also contend that the Commission’s balancing
of “public benefits against the potential adverse consequences”
of the Project was deficient. Certification of New Interstate
Natural Gas Pipeline Facilities, 88 FERC 61,227, 61,745
(Sept. 15, 1999); see Reply Br. 5–7. In petitioners’ view, the
Commission cannot have adequately balanced the potential
“negative impact on the environment or landowners’ property,”
Myersville, 783 F.3d at 1309, because the Commission
conducted a “deficient NEPA analysis,” Pet’rs’ Br. 75.
Because the court concludes that the Commission’s NEPA
analysis was adequate, this contention necessarily fails as well;
the Commission’s balancing of public benefits and adverse
consequences reasonably accounted for potential
environmental impacts.
C.
Finally, petitioners contend that under the U.S.
Constitution’s Fifth, Ninth, and Tenth Amendments, the
Commission interpreted the Natural Gas Act in a manner that
“unconstitutionally preempt[ed] legitimate state and local
action that is necessary and appropriate to protect public health,
safety and welfare.” Pet’rs’ Br. 78. This constitutional claim
is forfeited. Petitioners are “required to exhaust” even
“constitutional claims” before the agency, Springsteen-Abbott
v. SEC, 989 F.3d 4, 8 (D.C. Cir. 2021), even if the agency does
19
not have “the authority to rule on them in the first instance
during the agency proceedings,” Jarkesy v. SEC, 803 F.3d 9,
19 (D.C. Cir. 2015). Because petitioners did not raise any such
constitutional argument in requesting rehearing before the
Commission, see 15 U.S.C. § 717r, the court cannot consider it
here.
For the reasons discussed, the petitions for review are
denied.