On March 28, 2025, the D.C. Circuit denied a joint petition for review brought by Healthy Gulf and Sierra Club (together, “Petitioners”) challenging FERC’s grant of a certificate of public convenience and necessity (CPCN) to Driftwood Pipeline LLC (Driftwood) to construct two new natural gas pipelines (the “Project”) in southwestern Louisiana on grounds that FERC’s decision failed to comply with National Environmental Policy Act (NEPA) and the Natural Gas Act (NGA). The D.C. Circuit affirmed FERC’s analyses under NEPA and NGA but declined to address Driftwood’s claim that the Council on Environmental Quality’ (CEQ) regulations implementing NEPA, upon which Petitioners based their arguments, are not judicially enforceable because CEQ lacks authority to promulgate them.

In 2021, Driftwood applied to FERC for a CPCN to build the Project, which will connect existing pipelines with the Lake Charles gas market and serve Driftwood’s liquefied natural gas terminal affiliate (Driftwood Terminal).  In 2022, pursuant to its NEPA obligations, FERC published a final environmental impact statement for the Project, which concluded the Project “would result in some adverse environmental impacts, but none that are considered significant.” FERC also found that the Project would increase greenhouse gas (GHG) emissions but declined to characterize those effects as “significant” or “insignificant.” In 2023, FERC granted Driftwood a CPCN for the Project, finding that the Project would serve a market need and that the Project’s benefits outweighed potential adverse effects. Petitioners sought review of FERC’s order in the D.C. Circuit.

On appeal, Petitioners argued that FERC violated the NGA by finding that: (1) the Project would serve a market need, and (2) the Project’s benefits outweigh its costs. The D.C. Circuit held that FERC reasonably relied on three precedent agreements that subscribed 96% of the Project’s capacity and an independent market study to determine market need and that FERC appropriately considered the Project’s GHG emissions in weighing the Project’s benefits and costs.

Petitioners argued FERC violated NEPA by: (1) not considering the Project’s effects on upstream GHG emissions, (2) not determining whether the Project’s overall effects on GHG emissions were significant or insignificant, and (3) not considering the Project’s environmental effects together with the Driftwood Terminal’s environmental effects. Relying, inter alia, on its decision in Food & Water Watch v. FERC (see July 8, 2024, edition of the WER), the D.C. Circuit explained that under NEPA, an agency must only consider “reasonably foreseeable” environmental effects, and the upstream emissions caused by new natural gas infrastructure are only reasonably foreseeable if the agency can reasonably predict both the “number” and “location” of any additional wells that would be drilled as a result of production demand created by the Project. The court held that FERC adequately explained why it could not predict these factors because it did not know “whether transported gas would come from new or existing production.” The court also upheld FERC’s determination that there is not currently any “generally accepted” method for determining the significance of reasonably foreseeable GHG emissions. Finally, the D.C. Circuit held that Petitioners waived their argument that the Project’s environmental effects should have been considered with those of the Driftwood Terminal because Petitioners failed to raise it in their comments on FERC’s draft environmental impact statement.

Finally, in a footnote, the court acknowledged Driftwood’s argument that the CEQ regulations, upon which Petitioners based their arguments, are not judicially enforceable because another recent D.C. Circuit opinion, Marin Audubon Society v. Federal Aviation Authority, found that CEQ lacks rulemaking authority. The court also acknowledged that subsequently, in January 2025, President Trump revoked the 1977 executive order instructing CEQ to issue NEPA regulations, and CEQ has since issued an interim rule to remove its NEPA regulations from the Code of Federal Regulations (see President Trump Moves to Repeal NEPA Regulations). However, the D.C. Circuit explained that because Petitioner’s NEPA challenges fail on their merits, it did not need to “resolve the impact of” the Marin Audubon decision or President Trump’s executive order.

The D.C. Circuit’s opinion, issued in Case No. 23-1226, can be found here.