Commissioner Chang’s Dissent Regarding Item C-2 | Draft Policy Statement on Environmental Review of Natural Gas Act Applications

Item C-2 | Docket No. PL26-3-000 

CHANG, Commissioner, dissenting:

Today’s policy statement establishes a new method for assessing air quality impacts as part of the Commission’s review of pipeline certificate and liquified natural gas (LNG) authorization applications under the Natural Gas Act (NGA) and the National Environmental Policy Act (NEPA).  The policy statement’s new method for assessing air quality impacts departs from our current court-affirmed approach and will no longer adequately consider the local air quality effects from projects that we authorize.  If implemented, the policy change will leave the Commission with insufficient information about the severity of potential local air quality and human-health effects, and will deny the public an in-depth understanding of the extent of a project’s emissions and whether adverse impacts from those emissions will reach their communities.

Accordingly, I dissent from today’s order given the Commission’s legal obligation under the NGA and NEPA to disclose and assess all reasonably foreseeable direct adverse effects on local air quality from projects we authorize.  I share the concern that the Commission’s existing requirements and methodology have, at times, been applied inconsistently, and I support providing additional clarity and certainty about our regulatory requirements to alleviate confusion and make our review process more efficient.  However, we must do so carefully to ensure that we stay within the bounds of what is legally permissible.  Today’s order endeavors to test a novel legal theory:  that in passing the Clean Air Act (CAA), Congress intended to carve out a heretofore unrecognized NGA and NEPA exception that allows the Commission to forgo any balancing of adverse air quality impacts on local communities under the NGA or disclosure and analysis of the effects of direct air emissions on local air quality under NEPA.  As a result, the policy change creates greater uncertainty for the Commission and project developers, while simultaneously depriving the public of local air quality information as required by NEPA and relevant judicial precedent.

Background 

NGA Requirements

Section 7 of the NGA requires entities constructing facilities for the purpose of engaging in Commission-jurisdictional transportation or sales of natural gas to first obtain a certificate from the Commission.1  Section 7(e) states that a certificate shall be issued if, among other requirements, the Commission finds that the proposed activity “is or will be required by the public convenience and necessity.”2  Section 3 of the NGA provides the Commission with federal jurisdiction over facilities used to export or import natural gas,3 stating in section 3(e)(1) that “[t]he Commission shall have the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal.”4  Section 3 provides that an application for the exportation or importation of natural gas shall be approved unless the proposal “will not be consistent with the public interest.”5 

Under the public convenience and necessity standard, the Commission must “evaluate all factors bearing on the public interest” within the statute’s scope.6  The “principal purpose” of the NGA is to “encourage the orderly development of plentiful supplies of . . . natural gas at reasonable prices.”7  The Supreme Court has indicated that “subsidiary purposes” of the NGA include “conservation, environmental, and antitrust” considerations.8 

NEPA Requirements

NEPA requires the Commission to take a “hard look” at the reasonably foreseeable environmental effects of a proposed action and disclose our analyses to the public before taking or authorizing a major federal action that may significantly affect the quality of the human environment.9  That statute sets out procedures to be followed by federal agencies to ensure that the environmental effects of proposed actions are “adequately identified and evaluated.”10 

To comply with NEPA, the Commission is required to evaluate the effects of a proposed action through the preparation of either an Environmental Impact Statement (EIS) or an Environmental Assessment (EA), unless we find that the proposed action is covered by a categorical exclusion or is exempt from NEPA review under another law.11  NEPA requires preparation of an EIS for major federal actions that have a “reasonably foreseeable significant effect on the quality of the human environment.”12  For the Commission, most larger projects or proposals require preparation of an EIS and most smaller projects or proposals require preparation of an EA.13  Under NEPA’s requirements, when preparing an EIS, the Commission must:

evaluate “any reasonably foreseeable adverse environmental effects which cannot be avoided should the proposal be implemented”;14 and

identify and evaluate “a reasonable range of alternatives to proposed action…that are technically and economically feasible, and meet the purpose and need of the proposal.”15

These statutory requirements ensure the Commission carefully considers information concerning environmental impacts and that the information is made available to the public to inform comments that can, in turn, be factored into the agency’s decision-making process.16  NEPA does not provide an independent cause of action for those seeking to challenge the Commission’s decisions.  Instead, courts review an agency’s NEPA compliance under the Administrative Procedure Act’s (APA’s) arbitrary and capricious standard.17

The Clean Air Act 

As the nation’s primary statute governing air quality, the CAA seeks to protect human health and the environment by regulating air emissions that pollute ambient air.18  The statute is administered by the Environmental Protection Agency (EPA), with certain compliance authority delegated to state regulatory agencies under a cooperative federalism framework.  Under this framework, the EPA establishes minimum national air quality standards for the six criteria pollutants (referred to as National Ambient Air Quality Standards, or NAAQS)19 and state and local air permitting agencies have the primary responsibility to ensure compliance with the standards. 

The CAA requires states to develop and adopt State Implementation Plans (SIPs) to attain and maintain the federal NAAQS.  A SIP details the implementation, maintenance, and enforcement of the NAAQS across interstate or intrastate regions designated by EPA.20  Through the framework established in each SIP, EPA and state agencies regulate and permit air emissions and enforce air quality standards for stationary sources of air pollution, including emissions from natural gas compressor stations and LNG terminals. 

The CAA requires major stationary sources and other sources subject to federal standards to obtain operating permits that assure compliance with all CAA requirements. In most areas, state agencies issue the permits.  “Major” emission sources and major modifications at existing sources are subject to permitting requirements under EPA’s Prevention of Significant Deterioration (PSD) permitting program, including that the project must implement “best available control technology” and will not “cause, or contribute to” NAAQS violations.21 

State permitting agencies typically require that permit applicants submit air dispersion modeling as part of the PSD permitting process.22  Generally, a state’s analysis of anticipated air quality impacts in the Air Quality Control Regions (Air Regions) under their oversight23  involves up to three steps.  The three steps include: (1) a preliminary screening step that compares emissions estimates to significant impact levels (SILs)24 established by EPA; (2) if necessary, an impact analysis that uses air dispersion modeling including emissions from nearby sources to assess potential NAAQS exceedances; and (3) if necessary, a cause and contribute (i.e., culpability) analysis. 

The Commission’s Current Three-Step Approach to Assessing Impacts on Local Air Quality and Determining Significance Under NEPA

The Commission currently uses a three-step approach, described below, to assess air quality effects from compressor stations and LNG facilities and determine the “significance” of air quality impacts in our environmental reviews under NEPA.  While this approach is modeled after the analytical approach taken by states when considering issuing an air quality permit, the Commission’s review differs from that undertaken by states in both purpose and scope.  State air permitting programs are aimed at maintaining the state’s compliance with its SIP across entire interstate or intrastate Air Regions, which can be as large as an entire state.  In contrast, the Commission’s focus is on reviewing the severity of emissions impacts on local ambient air quality as part of our NEPA review, with a review area typically extending no further than a 50-kilometer radius around the project. 

Generally, step one of the Commission’s three-step approach is a preliminary screening step that compares the proposed facility’s projected maximum ambient air quality impact to a SIL to determine if the project’s anticipated emissions exceed the SIL.25  If the projected emission levels for a particular NAAQS criteria pollutant are below the applicable SIL, then no further analysis is typically required.  If a particular projected pollutant concentration exceeds the applicable SIL, then step two typically requires a dispersion modeling impact analysis for that pollutant.  Under such a step two analysis, each criteria pollutant that exceeded the SIL for a specified time period in step one is modeled independently. In this step, the dispersion model analysis considers the background emissions from existing sources in the area combined with the project’s emissions within the potential area of impact around the project.26  If there are no projected NAAQS exceedances identified in step two of the analysis, there is no need to proceed to step three, which determines whether the project’s emissions will cause or contribute to NAAQS exceedances in the local area, or in the vicinity of the proposed project. 

Together, these three steps provide an analytical framework that allows the Commission to adequately consider impacts to local air quality and to determine whether the emissions will have a “significant” impact under NEPA.  The Commission has explained that this approach of tying the “significance” of local air quality impacts under NEPA to potential NAAQS exceedances in the vicinity of a project is justified because the EPA developed the NAAQS to protect human health, including the health of sensitive populations (e.g., people with asthma or cardiovascular disease, children, the elderly, and others), accounting for the latest research on health impacts.27 Accordingly, when the Commission assesses impacts from emissions on local air quality in comparison to the NAAQS, we are using the NAAQS as a proxy for assessing potential human health impacts in the vicinity of a project.  Although states also use NAAQS thresholds for air permitting purposes, states are not using NAAQS to determine potential human health impacts in the vicinity of the project, but rather to determine appropriate conditions to ensure compliance with the applicable SIP across the Air Region.

Summary of the Air Policy Statement

The policy statement rolls back the Commission’s review of air quality impacts in two ways. First, the policy statement states that the Commission will no longer require air dispersion modeling for any NGA projects, including projects with projected substantial impacts such as compressor stations and LNG export facilities.  Second, the policy statement indicates that unless an applicant asks it to, the Commission will not use the results of air dispersion modeling to determine whether the impacts from a project will be “significant” under NEPA. 

Under this new approach, the Commission will require applicants to disclose the types of equipment they intend to install, including emissions factors28 for criteria pollutants, and Commission staff will prepare qualitative information (rather than the quantitative information that air dispersion modeling would provide) about how air emissions may be controlled or mitigated due to state air permitting requirements or voluntary commitments. 

Instead of using the Commission’s existing three-step process to determine whether a proposed project’s criteria pollutant emissions are “significant” under NEPA, going forward, the Commission will simply presume that no proposed project that we consider will have a “significant” air quality impact—under the assumption that a project with a valid state-issued CAA permit will not cause “significant” adverse air emissions effects.  Because a state air permit is necessary to receive final Commission approval, under this new policy, no project will ever trigger the preparation of an EIS due to its air emissions.    

In practice, the new policy will remove the consideration of air dispersion model results from the Commission’s analysis of natural gas projects’ air emissions impacts. In doing so, the Commission will no longer be able to conduct a thorough or accurate analysis of how much a proposed project will adversely impact local air quality.  Instead, the Commission will simply rely on operational emission estimates by using manufacturers’ specifications for the equipment used in the project.  In cases where the project applicants voluntarily submit their air dispersion modeling, the Commission will analyze those results, but such modeling will no longer be required for any NGA projects. 

The policy statement argues that this update is necessary because the responsibility of air regulation has been vested with the EPA and states through the CAA, and thus the Commission’s actions are duplicative and an overgrowth of the agency’s responsibility under NEPA.29 The policy statement also argues that the Commission’s existing practice has placed unnecessary burden on applicants, other stakeholders, and Commission staff, without adding substantive value to the Commission’s decision-making process.  As discussed below, I disagree with the policy statement’s characterization of the Commission’s use of air dispersion modeling to inform decision-making under the NGA and NEPA as unimportant, inconsequential, or redundant to the air quality permitting authority of the EPA and states under the CAA. 

The New Policy Falls Short of the Commission’s Legal Responsibilities Under the NGA and NEPA and Will Lead to Appellate Risk

By foregoing collection and analysis of air dispersion modeling results, the new policy will leave the Commission with insufficient information to fulfill our statutory responsibilities.  This includes balancing the public interest under the NGA and taking a “hard look” under NEPA at all reasonably foreseeable impacts, such as emissions impacts on local air quality.  The legal and technical flaws in the revised policy will lead to appellate risk and less certainty for project developers and the Commission. 

The Commission’s Revised Policy Fails to Meet Our NEPA Obligations

The Air Quality Assessment Method Announced in the Policy Statement is Inadequate to Fulfill NEPA’s Requirement that the Commission Take a “Hard Look” at All Reasonably Foreseeable Impacts

NEPA requires the Commission take a “hard look” at all reasonably foreseeable environmental effects of a proposed action before authorizing a major federal action that may significantly affect the quality of the human environment.30  If the revised policy were implemented, the Commission would fall short of meeting its legal obligation because although direct air emission impacts on local air quality are entirely foreseeable, the Commission will no longer disclose or assess how project emissions will impact local ambient air quality.  Furthermore, because NEPA requires that the Commission identify and assess all reasonably foreseeable impacts prior to issuing an authorization, relying on a promise of future compliance with a state air quality permit is inadequate.  Additionally, if the Commission’s NEPA review and NGA authorization are predicated on compliance with a state air quality permit, the legal viability of the Commission’s authorization can be called into question when an operator fails to comply with its air permit.   

The Policy Statement’s New Methodology is Technically Flawed 

The revised method for estimating and disclosing operational emissions falls short of the level of analysis needed to accurately assess reasonably foreseeable local air quality impacts as required by NEPA. 

As previously discussed, the Commission currently fulfills its NEPA obligation to identify and assess reasonably foreseeable emissions impacts on local air quality through our three-step approach.  Steps two and three of the process use air dispersion model results to assess impacts if the step one analysis shows that emissions from a project exceed the set limits.  The Commission does not request dispersion modeling results so that we may act as an air regulatory agency in the place of the EPA or states.  The policy statement’s claim that “independent Commission analysis of air modeling is duplicative and unnecessary” for “projects subject to PSD permitting” mischaracterizes the purpose of requesting modeling, which is NEPA compliance. 

To understand what the policy statement does not do, it is instructive to first understand what air dispersion modeling does do, and specifically how it helps the Commission satisfy its obligation to take a “hard look” at the local air emission impacts of a proposed project.  The use of air dispersion models provides critical information regarding a project’s incremental emissions in the context of its surroundings.  Air dispersion models are simulation tools that account for the design of the facility (i.e., the height and diameter of the smokestack and the velocity of the emissions as the plume enters the atmosphere, building locations, and distance of the facility relative to the project’s fence line), the topography of the surrounding area, the meteorology of the area (such as the wind direction and speed at and near the facilities to estimate how the wind might dilute the plume), and atmospheric turbulence to estimate how the emissions would “flow through” or “downwash” around the vicinity of the facilities, causing elevated ground level concentrations.31 

By analyzing the air dispersion modeling results, the Commission determines, discloses, and evaluates how a proposed project’s emissions will spread and interact with ambient background pollution and/or emissions from other nearby sources.  Through air dispersion modeling, a project applicant provides the Commission with information about how incrementally added emissions will spread and impact the overall air quality in the communities where projects are located. The modeling results allow the Commission to properly and accurately consider the context of how an individual project would impact existing ambient air quality by factoring in the background levels of emissions from other sources. 

Dispersion models are also uniquely valuable for capturing some of the complex dynamics of criteria pollutants once they are emitted.  Air pollutants may undergo chemical changes depending on characteristics of the plume itself and concentrations of specific reactants in the atmosphere.  For example, some criteria pollutants—such as ozone and fine particulate matter (PM2.5)—are secondary emissions that result from chemical reactions.32  Air dispersion models can inform the Commission of these interactions and the projected impacts from proposed projects.  These are important factors in the Commission’s decision-making. Turning a blind eye to such information is inconsistent with the requirement to take a “hard look” at all reasonably foreseeable environmental effects of a proposed action before authorizing a major federal action and thus fails to meet the Commission’s legal obligations. 

 While the policy statement characterizes the Commission’s three-step approach to assessing air quality impacts under NEPA as “unworkable for applicants, the Commission, and its staff” and as “misaligned with both the CAA and Supreme Court guidance on the proper scope of NEPA review,”33 using a multi-step method that includes air dispersion modeling information to assess air quality impacts is common among other federal agencies reviewing air quality impacts under NEPA.34

By comparison, the new approach announced in the policy statement is more of a “quick glance” than the “hard look” required by the statute.  Instead of the detailed assessment provided by air dispersion modeling, under the new method, the Commission would only estimate emissions by combining manufacturer estimates for each type of equipment with the schedule in which each piece of equipment may be operated.  The results from the manufacturers’ data for each type of equipment will then be contextualized alongside “qualitative evaluation” of “effects on nearby communities” and “proposed mitigation measures.”35 

This approach injects unnecessary ambiguity and uncertainty into the Commission’s analysis. Compared to the robust information provided by air dispersion modeling, a limited quantitative assessment based on the manufacturers’ emissions inventory method would not provide the necessary information to assess emissions.  Specifically, air dispersion modeling can reveal substantial differences in air quality impacts from two facilities that have identical amounts of total emissions of a specific pollutant per year.  Those differences cannot be revealed by manufacturers’ emissions inventories alone.  Modeling typically shows dramatically different concentrations of the same pollutant depending on the design of the facility and its location.  Thus, merely reporting estimated emissions in tons per year cannot capture these differences and will lead to an inaccurate and unreliable assessment of impacts.  Further, as for ozone and PM2.5, it is not possible to estimate a proposed project’s full impact on the concentration of these regulated pollutants without applying modeling techniques that incorporate assumptions about chemical conversions.  The policy statement announces the Commission’s intent to no longer require that modeling.

The policy statement’s qualitative discussion does not compensate for these quantitative deficiencies.  While qualitative information can help characterize the general nature and magnitude of an expected impact by looking at the estimated total daily or annual emissions from a proposed action, it will not be able to measure the impact to the concentrations of pollutants in the ambient air in the vicinity of the project. Thus, the revised approach will not be able to provide the Commission with sufficient information to determine whether a proposed project would cause or contribute to NAAQS exceedances in communities surrounding the project.  Furthermore, community members and other interested parties will not be able to determine whether emissions from a proposed project would adversely contribute to local air quality and cause it to fail to meet the health benchmarks set by the EPA.  Overall, the new method would not adequately quantify known and measurable direct impacts from a proposed project or facility and would not provide an accurate estimate of how emissions from the project may affect the local human environment.  

A project’s incremental emissions do not exist in a vacuum, and recognizing the full impact of those emissions requires consideration of the overall state of the surrounding environment.36  In the absence of continuous, on-site air quality monitoring, dispersion modeling is the only tool the Commission has that allows us to factor in existing ambient air quality and to disclose and assess the local, direct incremental impacts of certain projects, including many expansion projects. 

NEPA Requires an Accurate Assessment of Emissions Impacts on Local Air Quality 

The policy statement’s proposal to use a project’s anticipated state air permitting compliance as a proxy for determining the “significance” of local air quality impacts is impermissible under NEPA.  With respect to the assessment of impacts on local air quality specifically, courts have recognized that “[i]f a project may have potentially significant impacts on a local area,” as distinct from a broader context, “the agency must analyze such impacts.”37  While federal agencies are granted deference in determining the proper scope of their environmental review, such discretion is not unlimited.  Agencies must “balance need for a comprehensive analysis versus considerations of practicality, while also keeping in mind that use of a larger analysis area can dilute the apparent magnitude of environmental impacts.”38  When administering state air quality permitting programs, state regulators are focused on ensuring compliance with SIPs across Air Regions that include a mix of industrial, residential, and undeveloped land.  Thus, just because a state finds that a project meets CAA permitting requirements when the project’s emissions are diluted over an entire (sometimes interstate) Air Region, does not mean that the impacts of a project’s emissions on local air quality have been adequately reviewed under NEPA. 

Since Calvert Cliffs, courts have long recognized that permit requirements overseen by another federal agency or state permitting authority cannot substitute for a proper NEPA analysis.39 While the policy statement indicates the Commission will continue to disclose some information on operational emissions, it indicates that the emissions estimates and other information characterizing air quality will not factor into the Commission’s “significance” determination under NEPA, which will instead be based solely on a project’s anticipated compliance with a state air permit.40   

In addition to the concern that relying on a state air permit can dilute the apparent magnitude of emissions impacts, given the state’s focus on compliance over a larger region, there are other technical concerns with treating compliance with a state air permit as a proxy for assessing local air quality impacts.  SIPs include emissions requirements set by states and the EPA, but may also include provisions for emissions offsets, emissions trading, and emissions banking.  The fact that a project has agreed to purchase certain emissions offsets may be very relevant to a state agency’s determination that permitting a project is consistent with the state’s SIP.  However, those emissions offset purchases are not at all relevant to determining the severity of impacts the project emissions will have on local air quality because such emissions offsets do not change the real-world actual emissions in that local vicinity.     

A simple example highlights another gap that the policy statement will create in the Commission’s assessment of local air quality impacts.  States may not require any air quality modeling when an existing compressor station expands its capacity because the additional emissions are below the state’s set emissions threshold for requiring a permit.  Under the Commission’s existing approach, the Commission would use air dispersion modeling results to analyze the incremental emissions from the expansion, in the context of the overall emissions from the existing compressor station and expansion, to accurately assess how the combined emissions affect local ambient air quality.  Under the policy statement, the Commission would no longer model these combined emissions and would instead simply defer to state CAA permitting, even though the state does not require permitting for the expansion project and did not conduct modeling to assess air impacts relevant to the Commission’s NEPA obligations.  The net effect would be that the Commission will not adequately or accurately assess entirely foreseeable impacts, and thus would not provide the “hard look” required by NEPA.   

Accordingly, state CAA air permitting programs are not a substitute for NEPA review of reasonably foreseeable air quality impacts.  State and local air quality regulatory activities do not relieve the Commission from its NEPA obligation to adequately consider all reasonably foreseeable impacts from projects we authorize.  A presumption of CAA compliance does not and cannot relieve the Commission of its NEPA responsibilities.  As discussed further below, while Seven County Infrastructure Coalition v. Eagle County (Seven County)41 provides greater certainty that lower courts will provide deference to how the Commission conducts our analyses, Seven County does not provide deference on whether we need to conduct an analysis of impacts on local quality at all.

Under the New Policy, the Commission will be Unable to Comply with NEPA’s Requirement to Publicly Disclose all Relevant Information to Those Interested in and Impacted by Our Decisions

  As part of ensuring an accurate assessment of all reasonably foreseeable environmental impacts, the NEPA review process serves a broad and important public information purpose.  It “guarantees that the relevant information will be made available to the larger audience” interested in and impacted by the proposed federal action.42  A NEPA document is an important “springboard for public comment” and engagement.43  Such disclosure is not simply a side effect of NEPA; it is central to its statutory design and part of the Commission’s obligations under the law.

As today’s policy statement acknowledges, the purpose of preparing a NEPA document is to ensure that “important effects will not be overlooked.”44  NEPA “requires the Commission to at least attempt to obtain the information necessary to fulfill its statutory responsibilities.”45  Without an air quality assessment that considers whether project emissions may contribute to localized exceedances of federal air quality thresholds established to protect public health of the local communities, these communities will lack an adequate understanding of how local ambient air quality will be impacted by projects we authorize.

The Commissions Has an Obligation Under the NGA to Balance Public Interest Considerations, Including Local Air Emission Impacts

The Commission’s evaluation of the public convenience and necessity under the NGA requires that “the Commission balances the need for and benefits derived from the project against the potential adverse consequences.  Those consequences include impacts on landowners and environmental impacts identified in the NEPA document developed for the project.”46  Without conducting an assessment of a project’s emissions impact on local air quality, the Commission will be left without key information needed to conduct public interest balancing under the NGA. 

Importantly, under the NGA, the Commission may include in a pipeline/compressor station certificate “such reasonable terms and conditions as the public convenience and necessity may require”47 and the Commission can condition its LNG project authorizations based “upon such terms and conditions as [it] find[s] necessary or appropriate.”48  The Commission routinely exercises this authority to issue decisions that include dozens of environmental conditions intended to address concerns that were identified during the NEPA environmental review process.  As noted below, we have even issued conditions aimed at avoiding potential exceedances of NAAQS.49

The policy change is largely justified through a misreading of Seven County to suggest that procedural NEPA requirements to assess the direct environmental impacts of an agency’s actions can be sidestepped entirely if an agency preemptively concludes that the results of such an assessment would not change its decision to authorize.  In Seven County, the Supreme Court found that NEPA did not require the Surface Transportation Board to address the environmental effects of oil drilling, oil wells, or oil refinery projects separate in time or place from the construction and operation of the railroad line reviewed by the agency.  The Supreme Court emphasized that the agency possessed “no regulatory authority over those separate projects” and found “agencies are not required to analyze the effects of projects over which they do not exercise regulatory authority.”50

Citing Seven County, the policy statement concludes that “the depth and breadth of the Commission’s analysis under NEPA should be guided by the ‘usefulness’ of additional information to its substantive decision making” and finds that “air dispersion modeling does not add substantive utility to the Commission’s decision-making beyond what is already inherent in compliance with the CAA and state air permitting programs thereunder.”51  In effect, the policy statement is making a predetermination that the Commission would never find that the environmental costs associated with a project’s air emissions outweigh the project’s benefits.  The policy statement looks to the NEPA guidance provided in Seven County and attempts to find a legal rationale to avoid disclosing and assessing the direct environmental air quality impacts of projects squarely under the Commission’s authority to regulate, mitigate, and condition. 

The results from air dispersion modeling provide the Commission with useful information that informs the Commission’s decision-making.  In fact, due to information provided by air dispersion modeling, the Commission has imposed conditions to our previous decisions, including mitigation and monitoring.52  Furthermore, even if the Commission could reasonably conclude that those impacts would not alter the Commission’s decision under the NGA to approve certain proposed projects, the Commission cannot abdicate its separate and distinct responsibility under NEPA to identify, disclose, and accurately assess environmental impacts to local air quality. 

Legal and Technical Flaws in the Commission’s New Policy Will Lead to Appellate Risks for the Commission and Project Developers 

As discussed above, the policy statement falls short of our legal obligations under the NGA and NEPA.  Specifically, it fails to adequately explain why no assessment of local air quality impacts is required under the NGA or NEPA for any project that we review or why regional compliance with state CAA permitting requirements is an adequate proxy for a lack of “significant” impacts on local air quality.  Given these defects, Commission decisions that implement this policy will face substantial appellate risk. 

Courts review an agency’s NEPA compliance under the APA’s arbitrary and capricious standard.53  The court asks whether “the Commission’s judgment is supported by substantial evidence” and whether “the methodology used in arriving at that judgment is either consistent with past practice or adequately justified.”54  Review of an agency action is more demanding where the challenged decision stems from an administrative about-face.  Courts have found that “for [an] agency to reverse its position in the face of a precedent it has not persuasively distinguished is quintessentially arbitrary and capricious.”55 Thus, when reversing itself, “[an] agency is ‘obligated to supply a reasoned analysis for the change beyond that which may be required’” if the agency had not already established a position.56 The Commission has long considered the severity of a project’s impact on local air quality, and consequently, the policy change to forgo that consideration will be subject to heightened review under the APA. 

In Seven County, the Supreme Court emphasized that the arbitrary and capricious standard of review in the NEPA context affords agencies substantial deference, and judicial review only involves the court “confirm[ing] that the agency has addressed environmental consequences and feasible alternatives as to the relevant project.”57  The Supreme Court held that the reviewing court should ask “not whether it agrees with the agency decision, but rather only whether the agency action was reasonable and reasonably explained.”58  While Seven County emphasizes that courts should afford substantial deference to agencies and should not micromanage agency choices so long as they fall within a “broad zone of reasonableness,” Seven County is not a blanket authorization to avoid meaningful review of reasonably foreseeable environmental impacts.  As one court has stated, “Seven County did not grant an agency discretion to forgo reasoned analysis, nor did it exclude NEPA-related agency decisions from APA review. Seven County reaffirms that agency decision-making must be ‘reasonable and reasonably explained.’”59 

Today’s policy statement is far more than an attempt to clarify the technical contours of our existing air quality assessment practices or alleviate a purported overlap or duplication of review that should be undertaken by the EPA and states.  Instead, the statement announces a sudden shift away from our current assessment process and associated guidance.60  Compounding matters, the Commission’s air assessment practices will also deviate from how other federal agencies assess operational air impacts under NEPA post-Seven County.61

Here, the Commission is forgoing adequate review of direct, reasonably foreseeable emissions impacts on local air quality and is opting to instead rely on an applicant’s expressed intent to comply with CAA permitting requirements.  Seven County provides greater certainty that lower courts will provide deference to the Commission’s choice in the details of how we conduct our analytical efforts—not deference on whether we need to conduct the analysis at all.  This policy choice is not a scientific judgment entitled to judicial deference simply because it references or relies on technical considerations.  Instead, the policy statement sets out an approach through which the Commission stops evaluating any impacts on local air quality from proposed natural gas projects, thereby creating greater legal uncertainties for project applicants and potentially delaying projects when affected entities appeal the Commission’s decisions based on lack of adequate information.

Implementing the Policy Statement May Leave the Commission Unable to Support a CAA General Conformity Determination

The CAA provides that federal agencies may not permit, license, or approve any applicable activity that fails to conform to an approved SIP.  These conformity requirements only apply to activities that (1) are proposed in an Air Region designated by the EPA as in “nonattainment”; (2) have emissions that exceed a regional significance threshold set by the EPA; and (3) are not already subject to CAA permitting requirements.   

Accordingly, for projects in Air Regions designated as in nonattainment, the CAA requires federal agencies, including the Commission, to demonstrate compliance with the general conformity provisions of the CAA before the project can be permitted, licensed, or approved.  This requirement is carried out by issuing a General Conformity Determination, which serves as a signal from the agency that the activities under their review conform to an approved SIP (or multiple SIPs if a project’s activities impact multiple states).    The process for determining conformity involves two steps: (1) applicability and (2) determination. 

First, the Commission must assess applicability, meaning that the conformity determination is only needed when a proposed project includes activities subject to the CAA’s general conformity requirements.  Because the general conformity requirements do not extend to project activities that require a CAA permit (such as direct emissions from stationary sources, like a turbine at a compressor station), the Commission must instead look at all other direct and indirect sources of emissions, such as emissions from construction, marine vessels, and increased employee vehicle traffic.

Second, the Commission must make a conformity determination that considers the impact of all applicable direct and indirect emissions caused by the project under review.  The Commission may make a positive conformity determination based on reference to state emissions budgets, emissions offsets, air dispersion modeling results demonstrating conformity, or any combination of these. 

Air dispersion modeling is a key method used by federal agencies to reach an accurate and durable conformity determination.  Under our current practice, the Commission can use the results of air dispersion modeling to determine a baseline of existing ambient air quality. The air policy’s new assessment method, however—which uses total daily or annual emissions estimates based on equipment—may show substantially different results than what would be produced through air dispersion modeling, leaving the Commission with an inaccurate understanding of how project activities subject to the conformity requirements will impact ambient air quality.  This will leave the Commission unable to accurately assess whether emissions from project activities conform to a SIP.

The Commission’s Current Practice Encourages Project Applicants To Minimize Harmful Air Emissions

Throughout this statement I have identified my objections to the policy statement based on its failure to fulfill the Commission’s legal obligations to balance public interest considerations and accurately assess and disclose all reasonably foreseeable impacts of the activities subject to our review.  I also want to emphasize, however, that performing an accurate assessment of project emissions has real world impacts that go well beyond establishing a more legally durable record of decision. 

As I noted above, the Commission has previously imposed conditions on certificate authorizations, including mitigation and monitoring requirements, due to the results from air dispersion modeling.  We did so when the record showed the potential for a local NAAQS exceedance.  Fortunately, the Commission has not had to impose such conditions frequently because very few projects showed the potential for a NAAQS exceedance when we conducted an air quality analysis using our three-step method.  It is possible that relatively consistent compliance with local NAAQS has been due to the fact that project developers tend to design the projects recognizing our current policy in measuring local air emissions impact.  However, in the absence of air dispersion modeling, I am concerned that projects may not take the necessary steps to avoid causing or contributing to local NAAQS exceedances because the Commission will no longer be evaluating these local impacts.   

How I Intend to Review Applications Going Forward

Although I disagree with the policy statement, I also recognize that its potential effects will be limited to proceedings in which the Commission would have otherwise required air dispersion modeling.  Some proposed projects will not be substantially affected by this policy change because they do not yield new incremental operational air emissions. When reviewing future applications for natural gas and LNG facilities, I will continue to make case-by-case determinations based on the facts of each proceeding.  These decisions will be informed by (1) the type of project (e.g., whether the project will have ongoing air emissions); (2) the scale of the proposal (e.g., the amount of increased incremental air emissions, if any); (3) the existing ambient air quality in the vicinity of the project; and (4) what information is placed in our record of decision (e.g., modeling submitted voluntarily or prepared for state permitting purposes and placed into our record).  Many project applicants will provide enough information in the record to allow for a legally sufficient assessment of project impacts on air quality without the need for more refined air dispersion modeling given the anticipated emission levels. 

Conclusion 

Today’s policy statement is a significant and meaningful change in the Commission’s implementation of its responsibilities under the NGA and NEPA.  As explained above, the change falls short of our obligations under the law, and if implemented, creates uncertainties and legal risks that could undermine the very efficiency the policy statement seeks to achieve.  Nonetheless, while I disagree with my colleagues’ decision today, I share their stated goal of finding efficiencies in our permitting process and look forward to continuing those efforts with them where consistent with our statutory obligations.

________________________

Judy W. Chang

Commissioner

• 1U.S.C. § 717f(c).
• 2U.S.C. § 717f(e).
• 3U.S.C. § 717b(a).
• 4U.S.C. § 717b(e)(1).
• 5U.S.C.  § 717b(a).  “The Commission has long regarded Section 3’s ‘public interest’ standard and Section 7’s ‘public convenience and necessity’ standard as substantially equivalent.”  Distragas Corp. v. Fed. Power Comm’n., 495 F.2d 1057, 1065 (D.C. Cir. 1974) (citing El Paso Natural Gas Co., 38 F.P.C. 311, 319 (1967); The Montana Power Co., 11 F.P.C. 1, 7 (1952)).
• 6Atl. Ref. Co. v. Pub. Serv. Comm'n of State of N.Y., 360 U.S. 378, 391 (1959).
• 7Nat'l Ass'n for Advancement of Colored People v. Fed. Power Comm'n, 425 U.S. 662, 669-70 (1976).
• 8Id. at 670 n.6.
• 9U.S.C. § 4332(C); see also Baltimore Gas & Elec. Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 89 (1983).
• 10Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989) (Robertson).
• 11U.S.C. § 4336(a)(2), (b)(2).
• 12U.S.C. § 4336(b)(1).
• 13See 18 C.F.R. §§ 380.5, 380.6 (2025) (identifying actions that require an EA or EIS, respectively).
• 14U.S.C. § 4332(C)(ii).
• 15U.S.C. § 4332(C)(iii).
• 16See, e.g., Dep't of Transp. v. Pub. Citizen, 541 U.S. 752, 768 (2004) (explaining that NEPA “ensures that the agency, in reaching its decision, will have available, and will carefully consider, detailed information concerning significant environmental impacts.”).
• 17See Seven Cnty. Infrastructure Coal. v. Eagle Cnty., Colorado, 605 U.S. 168, 180 (2025) (Seven County).
• 18U.S.C. § 7401 et seq.
• 19The CAA requires the EPA to establish NAAQS for certain air pollutants, 42 U.S.C. § 7409, which are adopted by states at the regional level, 42 U.S.C. §7410(a)(1).
• 20U.S.C. § 7410(a)(1). A state implementation plan is a collection of regulations and documents used by a state, territory, or local air district to implement, maintain, and enforce NAAQS and to fulfill other requirements under the CAA.
• 21See 42 U.S.C. § 7475; Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 308-09 (2014).  This applies to new major sources or major modifications at existing sources for pollutants where the area the source is located in is in attainment or unclassifiable with the NAAQS.  See generally EPA, Prevention of Significant Deterioration Basic Information, https://www.epa.gov/nsr/prevention-significant-deterioration-basic-information (last updated Dec. 15, 2025).  For new major sources or major modifications in nonattainment areas, the Nonattainment NSR program imposes even stricter requirements. See EPA, Nonattainment NSR Basic Information, https://www.epa.gov/nsr/nonattainment-nsr-basic-information (last updated Dec. 15, 2025).
• 22Air dispersion modeling results can be used to map the “cloud” of emissions and estimate the concentration of the air pollution and “spread” of the emissions.  Most models identify specific receptor locations of interest, such as potential sensitive human exposure locations (schools, hospitals, care centers for the elderly), as well as designated ecological receptors and protected areas.
• 23Air Regions are designated geographic areas used by the federal government and states to monitor, manage, and enforce compliance with federal air pollution standards under the CAA.  There are nearly 250 Air Regions across the country, ranging in size from a single metropolitan area to entire states.  See https://aqs.epa.gov/aqsweb/documents/codetables/aqcrs.html
• 24EPA developed SILs as a threshold that permitting authorities can use to determine whether emissions from a proposed project (emissions source) or modification of an existing project could cause or contribute to air pollution in excess of the NAAQS.
• 25See Commonwealth LNG, LLC, 191 FERC ¶ 61,205, at P 4 (2025).
• 26See id. For expansion projects, the Commission typically requires applicants to add the air emissions calculated in step one (the expansion emissions concentration) to existing project emissions and background concentrations and compare the total concentration to the NAAQS even if the expansion itself would not cause emissions that exceed the SIL.  Commission staff uses this step two to disclose and assess the local air quality impacts of expansion projects for all pollutants and averaging periods in NEPA documents.  An air quality receptor is a specific geographic location or point where air pollution concentrations are measured, monitored, or calculated using computer models.
• 27EPA, Review of the Primary Nat'l Ambient Air Quality Standards for Oxides of Nitrogen, 83 Fed. Reg. 17226, 17230-17274 (Apr. 18, 2018) (codified at 40 C.F.R. §§ 50 et seq. (2025); See, e.g., Algonquin Gas Transmission, LLC, 154 FERC ¶ 61,048, at P 182 (2016).
• 28An emissions factor is used to determine the amount of pollutants released into the atmosphere per specific operational activity.
• 29I note that the EPA, the agency charged with oversight of the CAA, has commented on the majority of the Commission’s NEPA review documents and has never suggested that the Commission has overstepped our jurisdictional review by considering impacts on local air quality. 
• 30U.S.C. § 4332(C);  Baltimore Gas & Elec. Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 97.
• 31See EPA, Air Quality Dispersion Modeling - Preferred and Recommended Models, https://www.epa.gov/scram/air-quality-dispersion-modeling-preferred-and-recommended-models (last updated Oct 6, 2026); Robynn Andracsek, Robert Lambrechts, Air Dispersion Modeling in the Major Source Construction Permitting Process, Nat. Resources & Env't, Summer 2013, at 29; James A. Westbrook, Air Dispersion Models: Tools to Assess Impacts from Pollution Sources, Nat. Resources & Env't, SPRING 1999.
• 32Specifically, ozone is formed from reactions between volatile organic compounds (VOCs) and Nitrogen Oxides (NOx).  As a result, ozone concentrations may only be predicted through modeling that relies on an inventory of VOC and NOx emissions from both the proposed action and sources across a geographic area.
• 33Policy Statement at P 16.
• 34National Park Service, Air Resources Division. 2010. Technical guidance on assessing impacts to air quality in NEPA and planning documents. Natural Resource Report NPS/NRPC/ARD/NRR—2010/271. National Park Service, Denver, Colorado, at 8)  (explaining that if “the project is likely to result in a small amount of emissions… then no air quality modeling may be necessary” and that for projects likely to result in high levels of emissions, “more complex air quality modeling will be needed in most cases.”  Also explaining that “if a project is occurring in or near an area where the ambient concentrations are close (>80%) to exceeding the NAAQS, modeling should be considered to determine if the project is likely to contribute to a NAAQS exceedance.”)
• 35Policy Statement at P 33 (describing this approach, which is currently used to assess temporary construction-related emissions, as effective yet efficient). 
• 36See Grand Canyon Tr. v. FAA, 290 F.3d 339, 342 (D.C. Cir. 2002) (finding agencies “must give a realistic evaluation of the total impacts and cannot isolate a proposed project, viewing it in a vacuum”).
• 37WildEarth Guardians v. United States Dep't of Agric. Animal & Plant Health Inspection Serv. Wildlife Servs., 135 F.4th 717, 730 (9th Cir. 2025) (WildEarth Guardians); see also Anderson v. Evans, 371 F.3d 475, 489-90 (9th Cir. 2004).
• 38WildEarth Guardians 135 F.4th at 730 (citing Friends of the Wild Swan, 767 F.3d 936, 943 (9th Cir. 2014); Idaho Sporting Congress, Inc. v. Rittenhouse, 305 F.3d 957, 973–74 (9th Cir. 2002).
• 39See Calvert Cliffs’ Coordinating Comm., Inc. v. United States Atomic Energy Comm’n, 449 F.2d 1109, 1122-23 (D.C. Cir. 1971) (warning that “NEPA procedures, viewed by the Commission as superfluous, will wither away in disuse, applied only to those environmental issues wholly unregulated by any other federal, state or regional body.”); see also Env’t Def. Ctr. v. Bureau of Ocean Energy Mgmt., 36 F.4th 850 (9th Cir. 2022) (finding that BOEM violated NEPA by relying on another agency’s permit that was not designed to address the relevant impacts. Specifically, the court explained that the state permitting agency and BOEM had different statutory mandates, and that by treating the permit as a blanket proxy for environmental safety, BOEM had failed to take a “hard look” as required by NEPA).
• 40Policy Statement at 37 (stating that “a project with a valid CAA permit should not have significant impacts from its air emissions.”).
• 41Seven County, 605 U.S. 168 (2025).
• 42Robertson, 490 U.S. at 349; 42 U.S.C. § 4332(C) (“Copies of [the EIS] … and the comments and views of the appropriate Federal, State, and local agencies ... shall be made available ... to the public ....”).
• 43Robertson, 490 U.S. at 349.
• 44Air Policy Statement at 7 (citing Robertson, 490 U.S. at 349).
• 45Birckhead v. FERC, 925 F.3d 510, 520 (D.C. Cir. 2019).
• 46Transcon. Gas Pipe Line Co., LLC, 190 FERC ¶ 61,048, at P 98 (2025).  See also City of Oberlin, Ohio v. FERC, 937 F.3d 599, 602 (D.C. Cir. 2019) (holding that “[a]s part of the Section 7 certificating process ... the Commission must complete an environmental review of the proposed project under the National Environmental Policy Act”); Delaware Riverkeeper Network v. FERC, 45 F.4th 104, 109, 115 (D.C. Cir. 2022) (finding “the Commission's NGA section 7 balancing of public benefits and adverse consequences reasonably accounted for potential environmental impacts.”); Food & Water Watch v. FERC, 28 F.4th 277, 282 (D.C. Cir. 2022) (recognizing the NGA section 7 certificate process incorporates environmental review under NEPA).
• 47U.S.C. § 717f(e).
• 48U.S.C. § 717b(e)(3)(A).
• 49See infra note 74.
• 50Seven County, 605 U.S. 168 at 188.
• 51Air Policy Statement at P 26 (further emphasizing: “We are aware of no case in which the Commission has denied a Section 3 or 7 application based either wholly or in part on its air quality impacts.”)
• 52See, e.g., Transcon. Gas Pipe Line Co., 158 FERC ¶ 61,125, at PP 117-18 (2017), on reh’g, 161 FERC ¶ 61,250 (2017) (requiring air monitoring with requirement to “contact the state air quality agency to report [any] violation and establish a plan of action . . . in accordance with the terms of the facility air permit and applicable state law”); Rio Grande LNG, LLC, 183 FERC ¶ 61,046, at PP 141-42, 147 (2023), on reh’g, 185 FERC ¶ 61,080, at PP 40-41 (2023) (requiring a mitigation and monitoring plan to address short-term periods of heightened air quality impacts during overlapping construction, commissioning, and operation activities).
• 53Seven County, 605 U.S. at 180.
• 54Sierra Club v. FERC, 38 F.4th 220, 229 (D.C. Cir. 2022).
• 55Louisiana. Pub. Serv. Comm'n v. FERC, 184 F.3d 892, 897 (D.C. Cir. 1999).
• 56The Fund for Animals v. Norton, 294 F.Supp.2d 92, 104 (D.D.C. 2003) (quoting Motor Vehicle Manufacturers Ass'n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 41–42 (1983) (emphasis in original).
• 57Seven County, 605 U.S. at 183.
• 58Seven County, 605 U.S. at 179-80.
• 59Center for Biological Diversity v. United States Forest Service, No. 6:24-CV-00930-AA, at 20 (D. Or. Aug 9. 2026); see also Arizona Mining Reform Coal. v. United States Forest Service, 172 F.4th 641, 659 (9th Cir. 2026).
• 60The policy statement’s attempt to shift our well-established regulatory interpretation of how a project applicant can demonstrate air quality impacts runs counter to the APA requirement to use standard rulemaking procedures to promulgate substantive rules.  See Pac. Gas & Elec. Co. v. FPC, 506 F.2d 33, 38 (D.C. Cir. 1974) (“An agency may establish binding policy through rulemaking procedures by which it promulgates substantive rules…. A general statement of policy, on the other hand, does not establish a binding norm...”).  While agencies are afforded more discretion when issuing non-binding statements of policy, here there is no indication that the Commission has discretion to not apply the policy statement in individual cases, absent a specific request coming only from the project applicant.  Cf. Ass’n of Flight Attendants-CWA, AFL-CIO v. Huerta, 785 F.3d 710, 716 (D.C. Cir. 2015) (allowing policy statement that is not binding on the agency where the agency “retains the discretion and the authority to change its position.”).  Further, while the policy statement is ostensibly noticed as a draft, the 30-day notice period provides for comment only on how the new policy should be implemented, and not on the merits of the policy change itself.  This indicates that the Commission will not follow a standard rulemaking process. 
• 61See United States Department of Transportation, The Maritime Administration, Final Environmental Impact Statement for ST LNG Deepwater Port Development Project, July 24, 2026, at 3-161 to 3-164 (summarizing air dispersion model results that considered emissions the proposed project in addition to the ambient background concentrations and concentrations from nearby off-site sources and concluding that “[b]ased on the NAAQS modeling analysis results” as well as compliance with relevant air quality regulations that the “air quality impacts associated with Project operations would be direct and indirect, adverse, long-term, and minor”); United States Department of the Interior, Bureau of Land Management, North Bullfrog Mine Project Draft Environmental Impact Statement, May 2026, at 4-10 to 4-12 (explaining that “[d]ispersion modeling was conducted…to quantify and evaluate effects from the Project.”); and United States Department of the Air Force, Final Environmental Impact Statement for Authorizing Changes to the Falcon Launch Program at Vandenberg Space Force Base, California, October 10, 2025, at 3-8 to 3-12 (summarizing emissions calculations for launch, barge, and crane activities and referencing air modeling reports included in Appendix F).