On January 7, 2025, the U.S. Court of Appeals for the D.C. Circuit, in Citizens Action Coalition of Indiana v. FERC, rejected a National Environmental Protection Act (NEPA) and Natural Gas Act (NGA) challenge to FERC’s approval of a natural gas pipeline in Indiana after an Environmental Impact Statement was issued. Plaintiffs’ central challenge was that NEPA required FERC to analyze non-gas alternatives before approving the pipeline. The D.C. Circuit disagreed.

Expressing frustration with what have become regular NEPA challenges to critical energy infrastructure projects – challenges that follow federal permitting actions “as night follows day” – the Court found that NEPA does not require FERC to consider alternatives that are outside of FERC’s jurisdiction and would fail to serve the purpose of the project.

In other words, where a project’s purpose is to support new natural gas units, NEPA requires only that the permitting agency consider alternatives that would satisfy that purpose.

Further, in defining a project’s purpose, the Court concluded that FERC may give substantial weight to the siting and design of a private developer. Here, FERC properly refused to reconsider the mix of electricity generation chosen by Indiana that the approved pipeline would support. It was not required to do so under NEPA, nor could it do so under the NGA, which does not authorize FERC to choose between electricity generation sources – that decision is left to the states.

The Court also rejected the claim that FERC’s consideration of the greenhouse gas (GHG) emissions from the project and from the downstream power plant was insufficient because FERC failed to make a significance determination, but instead chose to report those emissions in quantitative terms. Citing its recent decision in Food & Water Watch v. FERC, the Court plainly concluded “NEPA contains no such mandate.”

Importantly, on the issue of GHGs, the Court also concluded that “while NEPA requires FERC to consider environmental effects of the projects it approves, it is far from clear what statutory authority FERC has, if any, to give determinative weight to the environmental effects of projects beyond its jurisdiction.” Indeed, nothing in the NGA suggests that FERC can prioritize environmental concerns over the primary objective of natural gas market development.

Citizens Action represents a marked shift from recent law out of the D.C. Circuit, particularly the Court’s expansive approach to NEPA that is currently under review by the Supreme Court in Seven County Infrastructure Coalition v. Eagle County, Colorado. In that case, the D.C. Circuit held that the Surface Transportation Board (STB) should have considered the effect of the proposed 88-mile-long railway in Utah on increased oil refining along the Gulf coast, notwithstanding the limited authority of the STB. In Citizens Action,by contrast, the D.C. Circuit curtailed the scope of NEPA review by renewing the emphasis on the project’s purpose:

Citizens Action in effect seeks a judicial directive exhorting FERC to promote general environmental concerns. But such a directive would far exceed our review under the APA as well as FERC's authority under the NGA and NEPA. Congress charged FERC with the development of natural gas pipelines, not with making local energy decisions or setting national environmental policy.

The volatility of the D.C. Circuit when it comes to the proper scope of federal agency review under NEPA—specifically whether NEPA requires an agency to study environmental impacts beyond the proximate effects of the action over which the agency has authority—may very well be settled by the Supreme Court in Seven County. In the interim, however, the D.C. Circuit this week rejected using NEPA to delay critical development projects.