## Facts

- Spire STL Pipeline LLC sought a certificate of public convenience and necessity under § 7(c) of the Natural Gas Act (NGA) to build a new interstate natural gas pipeline serving the St. Louis area.
- FERC prepared an environmental assessment and found no significant environmental impact, then issued the certificate.
- FERC’s market-need finding relied primarily on a long-term precedent agreement for about 87.5% of the project’s capacity between Spire STL and its corporate affiliate, Spire Missouri Inc.
- The project was not proposed to serve new load; it was justified largely on claimed reliability and infrastructure benefits.
- Environmental Defense Fund (EDF) argued to FERC that the affiliate precedent agreement had limited evidentiary value because it could reflect self-dealing rather than genuine market demand, and that FERC failed to meaningfully assess need or weigh harms to existing pipelines, customers, landowners, and communities.
- FERC denied rehearing, and EDF petitioned for review in the D.C. Circuit.

## Issues

1. Whether FERC acted arbitrarily and capriciously by treating an affiliate precedent agreement as sufficient (and effectively conclusive) evidence of market need without addressing substantial self-dealing objections.
2. Whether FERC failed to apply its certificate policy by inadequately assessing adverse impacts and failing to meaningfully balance public benefits against harms before finding the project required by public convenience and necessity.

## Decision

- The D.C. Circuit granted the petitions for review and vacated FERC’s certificate orders, remanding for further proceedings.
- The court held FERC did not engage in reasoned decisionmaking because it failed to meaningfully respond to nonfrivolous challenges to the probative value of the affiliate precedent agreement.
- The court held FERC also failed to conduct the interest-balancing analysis required by its own certificate policy, including adequate consideration of effects on existing pipelines and affected landowners and communities.
- Vacatur, rather than remand without vacatur, was warranted because the errors went to the core of the approval.

## Legal Principles

- Under the APA and NGA, FERC must engage in reasoned decisionmaking and meaningfully address nonfrivolous arguments central to the agency’s ultimate determination.
- A § 7 certificate requires a reasoned finding, on an adequate record, that the project is or will be required by present or future public convenience and necessity.
- Precedent agreements may be relevant evidence of need, but an affiliate precedent agreement cannot be treated as dispositive without scrutiny when the record raises credible self-dealing concerns.
- FERC must apply its certificate policy framework by assessing market need, evaluating adverse impacts on affected interests (including existing pipelines and captive customers, landowners, and communities), and then balancing benefits against harms.

## Conclusion

The court vacated FERC’s authorization of the pipeline because FERC relied largely on an affiliate precedent agreement without grappling with evidence-based objections to its probative value and because FERC did not adequately perform the required public-interest balancing before finding the project necessary under the NGA.


Environmental Defense Fund v. Fed. Energy Regul. Comm'n, 2 F.4th 953 (D.C. Cir. 2021)