Oil and Gas

Court ruling could broaden U.S. government environmental impact studies

NEW YORK, Aug 22 (Reuters) - Regulators approving new gas pipelines must try to analyze their potential to increase greenhouse gas emissions before giving them the go-ahead, an appeals court ruled on Tuesday, in a move industry representatives and environmentalists said could have far-reaching effects on infrastructure projects.

Judges on the District of Columbia Circuit of the U.S. Court of Appeals said in their ruling that, before it approved three gas pipelines proposed by Duke Energy Corp, the Federal Energy Regulatory Commission should have considered the environmental impact of the greenhouse gases likely to be emitted when gas transported by the pipelines was burned.

While some experts said the decision meant little more than an increase in paperwork for regulators, others said it could change the way the federal government decides what issues to examine in environmental impact studies required under the National Environmental Policy Act.

In the past regulators have considered only the effects of a project they have the authority to control, which are considered direct effects. But the appeals court’s decision could force them to consider indirect effects as well.

“FERC would obviously prefer to say ‘we’re approving a pipeline and here are the impacts from digging a trench and laying a pipe,’” said Elly Benson, a lawyer for the Sierra Club, one of the environmental groups that challenged the permit FERC gave for the pipelines in a petition before the appeals court.

“What they’re ignoring is the fact that this project includes the transmission of gas that everyone knows is going to be combusted,” added Benson, welcoming the court’s decision as a “very important victory.”

A FERC spokeswoman declined to comment. Spokespeople from Duke Energy did not immediately respond to a request for comment.

The ruling comes a week after President Donald Trump issued an executive order calling for regulators to shorten the process around infrastructure permitting to two years and appoint a lead federal agency to work on permitting for each new project.

Deidre Duncan, a partner at Hunton & Williams who represents a number of pipeline companies, said the ruling could foretell “significant” changes to regulators’ permitting duties, forcing regulators to look more broadly at proposed projects before approving them.

“If not changed on rehearing or ultimately by the Supreme Court, this case has broad implications for multiple industries and agencies in various contexts,” she said. (Reporting By Emily Flitter; Editing by Frances Kerry)