Another post in Common Resources series on natural gas exports. For an overview of the issue, see my introductory post. For economic analysis, see Joel Darmstader and Alan Krupnick's post, and follow up.
Should the federal government deny permits to export natural gas because it may lead to increased fracking? The Sierra Club thinks so—or at least argues that FERC and the Department of Energy should consider related risks in their decision. FERC/DOE disagreed, however, issuing a permit for Cheniere’s new export facility in Louisiana earlier this year along with an environmental assessment (EA) that says nothing about increased drilling—while claiming any fracking impacts are too speculative and remote to consider. Sierra has continued to press the issue, making similar demands in a different permit process. They may sue.
Sierra’s core claim is that federal law (the National Environmental Policy Act, or NEPA) requires DOE/FERC to complete a more detailed environmental impact statement including analysis of environmental impacts from increased fracking. Much of the question hinges on interpretation of NEPA requirements—how remote must environmental impacts be before agencies can ignore them in the environmental assessments? The chain of causation for environmental effects is often long and complex. NEPA explicitly requires analysis of “indirect” and “cumulative” impacts, but this cannot mean all possible impacts have to be analyzed, however remote, or assessments would be useless and impossible to complete.
Courts have long struggled with this issue, grasping at either general-but-empty principles or limited rules of thumb. In any given case there is rarely a clear answer. As some have noted, courts’ judgments on these issues can “seem more ends-driven than principled”—though to be fair to judges, there really is no good principle to guide their decisions.
DOE/FERC makes good arguments that increased fracking is too remote to consider, claiming that natural gas production depends on many factors, such that it’s impossible to say whether exports from one facility will lead to more production—in other words, such claims are merely speculative. But Sierra counters that increased production (and fracking) are foreseeable results of exports, pointing to statements by both Cheniere and FERC/DOE that not only acknowledge the possibility, but trumpet it as a benefit.
This debate is not very helpful, and shows how empty the “speculative” and “foreseeable” labels are. It also illustrates a deeper problem with NEPA—by purporting to create a bright line between those impacts that must be considered and those that can be ignored, the process creates perverse incentives. Opponents of action are tempted to demand analysis of remote effects to delay or block projects. And agencies are tempted to ignore issues entirely by claiming they are too speculative to consider.
The purpose of NEPA is to force agencies to acquire environmental data in their decisionmaking process, and, just as important, to inform the public. Even if you think increased fracking is too remote an effect to be useful in making decisions on export terminals, it’s hard to argue that at least some analysis of the issue wouldn’t be useful to the public. A study on how much more fracking we should expect if exports are allowed would certainly be more useful—and possibly less expensive—than a semantic battle over whether such development is “foreseeable” or not.
But that’s not possible under the current NEPA. Agencies must fully consider an issue if they consider it at all. This makes no sense. As others have suggested, a better policy would be to allow agencies to consider more remote or speculative impacts in less detail. Such a system would not eliminate controversy, of course. But it would get rid of perverse incentives and refocus debate on environmental risks, rather than empty semantics.